The marginal cost curve intersects
A) the average fixed cost curve at its minimum.
B) the average total cost curve at its maximum.
C) the minimum of the average fixed cost, average variable cost and the average total cost curves.
D) the minimum of the average variable cost and average total cost curves.

Question

Quizplus · Accepted Answer

The marginal cost curve intersects the average variable cost (AVC) and the average total cost (ATC) curves at their minimum points. This is because, as long as the marginal cost is below the AVC, the AVC is decreasing, and when the marginal cost rises above the AVC, the AVC starts increasing. Therefore, the point where the marginal cost curve intersects the AVC curve is the minimum point of the AVC curve. Similarly, the point where the marginal cost curve intersects the ATC curve is the minimum point of the ATC curve. The minimum point of the average fixed cost (AFC) curve is not intersected by the marginal cost curve because the AFC curve continuously decreases as output increases, and the marginal cost curve intersects the AFC at a point where the AFC is already very low.

The Marginal Cost Curve Intersects