Average total cost is equal to marginal cost when
A)average fixed cost is rising.
B)average variable cost is falling.
C)marginal cost is at its minimum.
D)average total cost is at its minimum.
E)average variable cost is also equal to marginal cost.

Question

Quizplus · Accepted Answer

Marginal cost is the additional cost incurred from producing one additional unit of output. When marginal cost is equal to average total cost, it means that the cost of producing an additional unit of output is equal to the average cost of producing all the units up to that point. This can only occur at the minimum point of the average total cost curve, where the curve is neither rising nor falling. Therefore, the correct choice is (D) average total cost is at its minimum.

Average Total Cost Is Equal to Marginal Cost When