The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. In the graph above, the average variable cost curve is labeled ________, the average total cost curve is labeled ________, and the marginal cost curve is labeled ________.

Question

The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive.   In the graph above, the average variable cost curve is labeled ________, the average total cost curve is labeled ________, and the marginal cost curve is labeled ________.

Quizplus · Accepted Answer

The marginal cost curve must intersect both the average variable cost and average total cost at their respective minimum points. Average total cost is the sum of all payments made to a firm's fixed and variable factors of production divided by total output.

The Accompanying Graph Shows the Cost Curves for Moe's Mushroom