The minimum points of the average variable cost and average total cost curves occur where
A)the marginal cost curve lies below the average variable cost and average total cost curves
B)the marginal cost curve intersects those curves
C)wages are the lowest
D)the slope of total cost is the smallest
E)the elasticity of demand is unitary

Question

Quizplus · Accepted Answer

The minimum points of the average variable cost and average total cost curves occur where the marginal cost curve intersects those curves. This is because at that point, the increase in total cost resulting from producing one more unit is exactly offset by the decrease in average cost as a result of spreading fixed costs over a larger output. Therefore, the cost of producing an additional unit is minimized at that point.

The Minimum Points of the Average Variable Cost and Average