When average cost is "u-shaped" (neither always rising nor always falling), the marginal cost curve will
A)cross through (intersect)the average cost curve at its maximum.
B)not intersect with the average cost curve at all.
C)be a fixed distance above the average cost curve.
D)cross through (intersect)the average cost curve at its minimum.

Question

Quizplus · Accepted Answer

When the average cost curve has a "U-shape", the marginal cost curve intersects it at its minimum point. This is because the marginal cost curve is typically upward sloping and intersects the average cost curve where it is steepest, which is at the minimum of the "U-shape". When the average cost curve is "u-shaped," the marginal cost curve will intersect the average cost curve at its minimum point. This is because the marginal cost curve cuts through the average cost curve so that the average cost is decreasing around the minimum point, and increasing beyond it.

When Average Cost Is "U-Shaped" (Neither Always Rising nor Always