The relationship between AC and MC is explained with the help of the following schedule:
| Output |
TC(Rs.) |
AC(Rs.) |
MC(Rs.) |
| 0 |
10 |
∞ |
- |
| 1 |
20 |
20 |
10 |
| 2 |
28 |
14 |
8 |
| 3 |
34 |
11.3 |
6 |
| 4 |
38 |
9.5 |
4 |
| 5 |
42 |
8.4 |
4 |
| 6 |
48 |
8 |
6 |
| 7 |
56 |
8 |
8 |
| 8 |
72 |
9 |
16 |
(i) So long AC is falling, AC is greater than MC.
(ii) When AC is rising, AC < MC
(iii) When AC lowest, AC = MC.
