The intersection of the marginal cost curve and the average cost curve characterizes the point of:
A)maximum profit.
B)minimum average cost.
C)minimum marginal cost.
D)minimum opportunity cost.
E)minimum profit.

Question

Quizplus · Accepted Answer

The intersection of the marginal cost and average cost curve represents the point at which the average cost is minimized. This is because when the marginal cost is below the average cost, the average cost is declining. Conversely, when the marginal cost is above the average cost, the average cost is rising. The point at which they intersect, therefore, reflects the minimum point on the average cost curve. This is important for firms looking to minimize their production costs and maximize profits.

The Intersection of the Marginal Cost Curve and the Average