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ATC = AVC +AFC, so if the fall in AFC exceeds the rise in AVC, ATC can fall.


Ignore this though, as if MC is rising then ATC must rise too, as far as I can see

Yes, nice edit

So what is happening?!?

I called my friend and she told me the answers.

A firm produces at AVC = MC. What will happen initially to AVC and ATC as output rises?

AVC ATC
dec dec
dec inc
inc dec
inc inc

MC cuts AVC at its minimum point, so as output rises from AVC = MC, AVC will increase.
MC cuts ATC at its minimum point as well, which is at an output level above that where AVC = MC due to the effect of the fixed costs.
Therefore as the output rises from AVC = MC, ATC should decrease.

So I think the answer should be (AVC) inc, (ATC) dec.

Hahaha... those maths people don't understand economics
There are loads of other Econ people on this forum, at least one shold know....

Wait and watch

Actually, the post I edited was correct. AFC continues to fall as output increases, so initially even though AVC rises, ATC falls, as below
http://www.pcecon.com/notes/noteimages/ProdCostPics/MCAVCATC.gif

I see. When I read that, I went back to look at the diagrams and yes that is what is happening. But the question doesn't explicitly say that they want the level before MC = ATC, which is why I got confused. Then again, it does say initially.... meh...

Thanks Alex

Apagg is right. Ignore what I said, stupid diagram, lol, had long run and short run mixed together.

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