Both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the average variable cost curve, the marginal cost must be:
A) greater than the average variable cost.
B) less than the average variable cost.
C) equal to the average variable cost.
D) at its minimum.

Question

Quizplus · Accepted Answer

At the minimum point on the average variable cost curve, the marginal cost must be equal to the average variable cost. This is because the minimum point on the average variable cost curve indicates the point where the cost of producing each additional unit of output is at its lowest. At this point, the marginal cost must be in line with the average variable cost. If the marginal cost is higher, the average variable cost would be increasing; if the marginal cost is lower, the average variable cost would be decreasing, which would mean that the minimum point has not been reached yet. Therefore, the marginal cost must be equal to the average variable cost at the minimum point of the average variable cost curve.

Both the Marginal Cost and the Average Variable Cost Curves