At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?

• A. At the minimum point of the AVC curve
• B. At the maximum point of the AVC curve
• C. At the minimum point of the MC curve
• D. At the point where AVC equals average total cost (ATC)

Answer: (A)

Verified step by step guidance

1. Recall the definitions: Marginal Cost (MC) is the additional cost of producing one more unit of output, and Average Variable Cost (AVC) is the variable cost per unit of output.
2. Understand the relationship between MC and AVC: When MC is less than AVC, AVC is decreasing; when MC is greater than AVC, AVC is increasing.
3. Identify the point where MC intersects AVC: This occurs exactly when MC equals AVC, which is the turning point of the AVC curve.
4. Recognize that the turning point where AVC changes from decreasing to increasing is the minimum point of the AVC curve.
5. Conclude that the MC curve intersects the AVC curve at the minimum point of the AVC curve.