A firm's average total cost is at its minimum when its marginal cost is:
Correct answer: A. Equal to average total cost
- A. Equal to average total cost
- B. Greater than average total cost
- C. Equal to total fixed cost
- D. Less than average variable cost
Explanation
When marginal cost is below average total cost, it pulls the average downward, and when it is above average total cost, it pushes the average upward. Therefore, marginal cost intersects average total cost at its minimum point.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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