In a diagram showing the average total cost and average variable cost curves, the minimum point of the average total cost is
A)at the same level of output as the minimum point of the average variable cost.
B)at a higher level of output than the minimum point of the average variable cost.
C)at a lower level of output than the minimum point of the average variable cost.
D)at the same level of output as the maximum of the total product curve.

Question

Quizplus · Accepted Answer

The minimum point of the average total cost (ATC) curve occurs at a higher level of output than the minimum point of the average variable cost (AVC) curve because the ATC includes both variable and fixed costs, and as output increases, the fixed costs are spread over more units, lowering the ATC until it reaches its minimum point.

In a Diagram Showing the Average Total Cost and Average