Why MC crosses ATC and AVC at their minima?
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Solution : It happens because when Average Variable Cost (AVC) falls, Marginal Cost (MC) is less than AVC. When AVC starts rising, MC is more than AVC. So, it is only curve cuts AVC is constant and at its minimum point, that MC is equal to AVC. Therefore, MC curve cuts AVC curve at is minimum point. Show Marginal cost (MC) is the extra cost incurred when one extra unit of output is produced. Average product (AC) is the total cost per unit of output. When the MC is smaller the AC, the AC decreases. This is because when the extra unit of output is cheaper than the average cost then the AC is pulled down. Similarly, when the MC is greater than the AC, the AC is pulled up. The point of intersection between the MC and AC curves is also the minimum of the AC curve. This can be explained by the fact that when the cost of the marginal output is equal to the average cost of the output, then the AC neither falls nor rises (i.e. it reaches its minimum). Why does MC intersect ATC at minimum?The marginal cost (MC) curve intersects the average total cost (ATC) curve at its lowest point because once the marginal cost exceeds the average cost, the average cost starts to increase. When marginal cost is less than average cost, the average cost falls as production increases.
Why does MC cut AVC at minimum?Solution : It happens because when Average Variable Cost (AVC) falls, Marginal Cost (MC) is less than AVC. When AVC starts rising, MC is more than AVC. So, it is only curve cuts AVC is constant and at its minimum point, that MC is equal to AVC. Therefore, MC curve cuts AVC curve at is minimum point.
Does MC always intersect AVC at minimum?Review: Average variable cost (AVC) is the cost of labor per unit of output produced. When MC is below AVC, MC pulls the average down. When MC is above AVC, MC is pushing the average up; therefore MC and AVC intersect at the lowest AVC.
Where does MC cross the ATC and AVC curves?When AVC and ATC are rising, MC must be above the average cost curves. Therefore, MC intersects the average cost curves at the average cost curves' minimum points.
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