The marginal cost curve intersects the average variable cost curve at the point where average variable cost is:
Correct answer: B. At its minimum
- A. At its maximum
- B. At its minimum
- C. Equal to average fixed cost
- D. Equal to total fixed cost
Explanation
When marginal cost is below average variable cost, it pulls average variable cost down. When it is above average variable cost, it pushes it up, so the intersection occurs at the minimum point of average variable cost.
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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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