Question

Which two curves are intersected by MC curve at their minimum points?

• A. AC and AVC
• B. AVC and AFC
• C. AC and AFC
• D. AC and TVC

Hint:

When the marginal cost curve intersects the average cost or average variable cost curve at its minimum point, it indicates that the firm is operating efficiently.

Answer 1

The Correct Option is A

Step 1: Understanding Marginal Cost (MC):
Marginal cost (MC) is the cost of producing one more unit of output. It plays a critical role in cost theory, as it helps determine the optimal level of production.
Step 2: Understanding Average Cost (AC) and Average Variable Cost (AVC):
- AC (Average Cost): The total cost per unit of output, including both fixed and variable costs.
- AVC (Average Variable Cost): The variable cost per unit of output, excluding fixed costs.
The marginal cost curve intersects both the average cost curve (AC) and the average variable cost curve (AVC) at their respective minimum points. This is because, when MC is less than AC or AVC, the curves are falling, and when MC is greater than AC or AVC, the curves are rising. Hence, the MC curve intersects both at the minimum points.
Step 3: Conclusion:
The correct answer is option (A), where the MC curve intersects the AC and AVC curves at their minimum points.