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Can an average cost curve start from a y-axis touch?
Can an average cost curve start from a y-axis touch?
Expert Solution
The average total cost cannot start from the y-axis. At the y-axis, the average total cost is undefined.
The average total cost is calculated as:
- ATC=TCQATC=TCQ
Along the y-axis, Q = 0. Therefore:
- ATC=TC0=∞ATC=TC0=∞
The average total cost therefore does not intersect the y-axis.
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