Average cost minimization occurs at the point where:

Question

Quizplus · Accepted Answer

The point where MC (marginal cost) is equal to AC (average cost) is the point where the average cost is minimized. At this point, the firm is producing at the most efficient level, minimizing the cost of producing each unit of output. MC = 0 occurs at the point where the total cost is minimized, not the average cost. AC = 0 is not possible as fixed costs cannot be zero. Q = 0 does not make sense in this context as it refers to zero output, which is not relevant to average cost minimization.

Average Cost Minimization Occurs at the Point Where