The marginal cost curve intersects the average variable cost curve (AVC)
A)only when the AVC is rising
B)at the AVC curve's maximum point
C)at the AVC curve's minimum point
D)only when the AVC is sloping downward
E)when the AVC intersects the fixed cost curve

Question

Quizplus · Accepted Answer

The marginal cost curve intersects the average variable cost curve at its minimum point. This is because the AVC curve slopes downwards initially due to economies of scale, but eventually starts sloping upwards due to diseconomies of scale. The point where the AVC curve reaches its minimum is the point where the marginal cost curve intersects it. At this point, the MC curve is equal to the AVC curve and hence, any further increase in production leads to a rise in AVC.

The Marginal Cost Curve Intersects the Average Variable Cost Curve