Consider the following statements when answering this question: I. The marginal cost curve intersects the average total cost and average variable cost curves at their minimum values.
II) When a firm has positive fixed costs, the output level associated with minimum average variable costs is less than the output associated with minimum average total costs.
A) I is true, and II is false.
B) I is false, and II is true.
C) I and II are both true.
D) I and II are both false.

Question

Quizplus · Accepted Answer

I is true because the marginal cost curve intersects the average total cost (ATC) and average variable cost (AVC) curves at their lowest points, which is a fundamental principle of microeconomics. II is also true because when there are positive fixed costs, the AVC curve reaches its minimum before the ATC curve does, due to the spreading effect of fixed costs over a larger output.

Consider the Following Statements When Answering This Question: I