The marginal cost curve
A) Intersects the average cost curve from above at the efficient scale of production
B) Lies below the average cost curve
C) Intersects the average cost curve from below at the highest point on the average cost curve
D) Intersects the average cost curve from below at the efficient scale of production

Question

Quizplus · Accepted Answer

The marginal cost curve intersects the average cost curve from below at the efficient scale of production. This is because at the efficient scale of production, the marginal cost is equal to the average cost. When the marginal cost is below the average cost, the average cost is decreasing, and when the marginal cost is above the average cost, the average cost is increasing. Therefore, the intersection point of the marginal cost curve and the average cost curve represents the minimum point of the average cost curve, which is the efficient scale of production.

The Marginal Cost Curve