Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Production and Costs

Question:
Read the following statements - Assertion (A) and Reasoning (R):
Assertion: The minimum point of SAC curve lies to the right of the minimum point of AVC curve.
Reason: After a certain level of output, AVC starts rising, but AFC continuous to fall. Initially the fall in AFC is greater than the rise in AVC and SAC is still falling.
Options:
Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is not the correct explanation of Assertion (A).
Assertion (A) is true but Reasoning (R) is false.
Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).
Assertion (A) is false but Reasoning (R) is true.
Correct Answer:
Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).
Explanation:
After a certain level of output, AVC starts rising, but AFC continuous to fall. Initially the fall in AFC is greater than the rise in AVC and SAC is still falling. Hence, lowest point of SAC comes after lowest point of AVC.