When average total cost is at its minimum point: a

Accounting Dec 08, 2020

When average total cost is at its minimum point:

a. Marginal cost is also at its minimum point,

b. Marginal cost is equal to zero,

c. Marginal cost is constant,

d. Average total cost is equal to marginal cost,

e. The firm is maximizing profit.

Expert Solution

The answer is d. Average total cost is equal to marginal cost.

The marginal cost (MC) curve intersects the average total cost (ATC) curve when the latter is at its minimum point. This is because the ATC goes down when the MC is less than ATC, and ATC increases when the MC is more than ATC.

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