If the average total cost curve and the average variable cost curve are both U-shaped, then the minimum point of the average total cost curve must lie above the minimum point of the average variable cost curve.

Question

Quizplus · Accepted Answer

The average total cost curve includes both fixed and variable costs, while the average variable cost curve includes only variable costs. The fixed costs cause the average total cost curve to be higher, and its minimum point occurs at a higher level of output than the minimum point of the average variable cost curve.

If the Average Total Cost Curve and the Average Variable