Question

The average total cost curve and the marginal cost curve are related in that:

A. the MC curve rises when the ATC curve falls.

B. the ATC curve passes through the minimum point of the MC curve.

C. the MC curve passes through the minimum point of the ATC curve.

D. the ATC and MC curves both rise and fall together.

Answer 1

C. the MC curve passes through the minimum point of the ATC curve.

Step-by-step explanation:

Marginal cost is the cost of producing additional unit, it is upward sloping as generally the cost that is additional as it tends to increase with increase in output.

Whereas Average Total Cost is a U shaped curve, it basically starts from a high point and then tends to decrease as the increase in number of units with constant fixed cost tends to decrease the average, but ultimately after it reaches its lowest point it tends to increase because now to produce units, there is extra cost required.

The Marginal Cost Curve touches the Average Total Cost curve at its lowest.