MC-curve + AC-curve?

Question

Q: The marginal cost curve will intersect the average cost curve at is minimum point

A:

I know its true ...it's gotta be true to be economic efficient... but this is only the case in perfect competition, i assume?

does anyone know a better explanation? and how it differes in economic models? (ie, perfect competition, monopoly, oligopoly, etc.)

Answer 1

Ac intersects MC at all economies

in perfect competition MC=Ac {constant}

monopoly MC is  constant Ac decline

this changes for all competition

Answer 2

The marginal cost curve wil intersect the minimum value of the average cost curve in ALL situations. The type of industry - pure competition, monopoly, oligopoly, or monopolistic competition - has no bearing on this.

The reason marginal cost intersects minimum average cost can be explained using the analogy of test scores. Lets say a person's test scores represent marginal costs. That is, they represent the additional points a person earns in a college course. The average cost is analogous to the course grade. Because course grades are the averages of the tests. Say the person has an average grade of 80%. If the person takes another test (a marginal test) and scores higher than 80%, say a 95%, this marginal test will raise the average grade. A marginal test with a score of lower than 80% will lower the average grade. The main point to take away from this is that averages are ALWAYS chasing mariginals. Add a marginal that is lower than the average, the average falls. Vice Versa.

If you look at a picture of the MC and AC curves you will see the relationship between the two.

But to answer your question more specifically, MC intersecting AC at its minimum has nothing to do with efficency, it has to do with pure mathematical concepts.