Interactive simulator
Cost Curves Simulator
From the production function come the cost curves. This simulator plots marginal cost (MC), average total cost (ATC), and average variable cost (AVC) as output expands. Because of diminishing returns, MC rises; it pulls AVC and ATC down while below them and pushes them up once it crosses from below. The MC/ATC crossing marks the minimum-cost output — the scale at which the firm is most efficient. In this release this page is powered by the closest available interactive widget; a dedicated widget for this topic is planned.
Equilibrium solves Qd = Qs, so P* = (a − c) ÷ (b + d). Shifting demand changes a; shifting supply changes c. A ceiling only bites when set below P* (creating a shortage); a floor only bites when set above P* (creating a surplus).
How to use it
Increase output with the slider.
Watch MC fall then rise, and AVC/ATC follow in U-shapes.
Find the MC crossings — the minimum points of AVC and ATC.
What you will learn
- Explain the U-shape of short-run cost curves.
- State why MC crosses AVC and ATC at their minimums.
- Link cost curves to the firm's supply decision.
Model notes
Short-run with fixed costs assumed; the numbers are illustrative. Long-run scale economies, learning effects, and input-price changes are omitted.