Select the correct statements from the following with regard to cost curves:

(A) Short run marginal cost, average variable cost and short run average cost curves are 'U'-shaped.
(B) SMC curve cuts the AVC curve from below at the minimum point of AVC.
(C) SMC curve cuts the AFC curve from below at the minimum point of AFC.
(D) Average fixed cost curve is downward sloping.

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is Option (1) → (A), (B) and (D) only

(A) Short run marginal cost, average variable cost and short run average cost curves are 'U'-shaped. Correct. The U-shape is a result of the Law of Variable Proportions (or Diminishing Marginal Returns).

(B) SMC curve cuts the AVC curve from below at the minimum point of AVC. Correct. This is a fundamental relationship: when Marginal Cost (MC) is less than Average Cost (AC), the average falls; when MC is greater than AC, the average rises. Therefore, MC must intersect the average curve at its lowest point.

(C) SMC curve cuts the AFC curve from below at the minimum point of AFC. Incorrect. The Average Fixed Cost (AFC) curve is continuously downward sloping (a rectangular hyperbola) and never has a minimum point from which the SMC curve can cut it.

(D) Average fixed cost curve is downward sloping. Correct. As output increases, the Total Fixed Cost (TFC) is spread over a larger number of units, causing the Average Fixed Cost ($\text{AFC}=\text{TFC}/\text{Q}$) to continuously decline.