Which statement is correct?
A)Marginal cost is the change in average cost when there is a change in output of 1 unit.
B)The marginal cost curve cuts the average variable cost curve at its lowest point.
C)The marginal cost curve cuts the average variable cost curve at an output greater than where the marginal cost curve cuts the average cost curve.
D)If average variable cost is increasing, then average total cost must be increasing too.

Question

Quizplus · Accepted Answer

The marginal cost curve intersects the average variable cost (AVC) and average total cost (ATC) curves at their lowest points. This is because when marginal cost is below either average, it pulls the average down, and when it is above, it pushes the average up. Therefore, the point where MC equals AVC or ATC is the minimum point of those curves.

Which Statement Is Correct