Kelly, who grows geraniums to sell, is currently producing a level of output at which her marginal cost equals her average variable cost. Which of the following best describes Kelly's average variable cost at this level of output?
A) It is greater than the average total cost.
B) It is neither at its maximum nor its minimum.
C) It is at a maximum.
D) It is at a minimum.

Question

Quizplus · Accepted Answer

When marginal cost equals average variable cost, average variable cost is at its minimum. This is because when MC is equal to AVC, the curve for AVC is at its lowest point before it starts to increase again.

Kelly, Who Grows Geraniums to Sell, Is Currently Producing a Level