When average cost is "u-shaped" (neither always rising nor always falling), the marginal cost curve will be a fixed distance above the average cost curve.

Question

Quizplus · Accepted Answer

The marginal cost curve intersects the average cost curve at its lowest point, not at a fixed distance above it throughout. When average costs are decreasing, marginal costs are below average costs, and when average costs are increasing, marginal costs are above average costs.

When Average Cost Is "U-Shaped" (Neither Always Rising nor Always