Question:

The MC curve intersects the AVC and ATC curves at their minimum point * the time?

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all of the time

or most of the time

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  1. all of the time

    when the MC is below the ATC, the next unit costs less than the average to make, so it brings the average down.  Therefore, when MC is less than ATC, the ATC curve is decreasing.

    When the MC is above ATC, the next unit costs more than average to make, so it brings the average up.  Therefore, when MC is greater than ATC, ATC is increasing.

    Because of this, MC must equal ATC at its lowest point.  

    Same logic applies for AVC.

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