Final answer:
At the minimum point of the average variable cost (AVC), it is equal to the marginal cost (MC), which occurs when the AVC curve intersects with the MC curve.
Step-by-step explanation:
When average variable cost (AVC) is at its minimum, AVC is equal to marginal cost (MC). This is because the lowest point on the AVC curve typically coincides with the point where it intersects with the MC curve. Essentially, at the minimum AVC, an additional unit of output increases total cost by exactly the same amount as the average variable cost, indicating that AVC and MC are equal at that point. This is also supported by economic theory, as at the minimum point of the AVC curve, the cost of producing one more unit (MC) will either pull the average down if MC is lower, or push the average up if MC is higher. Since we are at the minimum AVC, the MC must be equal to the AVC. This relationship between cost curves is crucial for businesses to determine their level of production in order to maximize profit or minimize losses.