In cost theory, at which point on a firm's average total cost curve does the marginal cost curve intersect it?
Answer and explanation
Correct answer: B. At the minimum point of the average total cost curve
- Step 1: When marginal cost is below average total cost, it pulls ATC down; when MC is above ATC, it pulls ATC up. Therefore, MC intersects ATC exactly at its minimum point. Answer: At the minimum point of the average total cost curve. Why not the others: ATC has a minimum rather than a maximum, the intersection is not on the axis, and the shutdown point occurs at minimum average variable cost.
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