Question

At their respective minimums, marginal cost equals both average variable cost and average total cost?

Answer 1

Marginal cost is equal to both average variable cost and average total cost at their respective minimums.

Step-by-step explanation:

Marginal cost represents the additional cost incurred when producing one additional unit of output. Average variable cost is calculated by dividing the total variable cost by the quantity of output. Average total cost is calculated by dividing the total cost by the quantity of output.

At their respective minimums, marginal cost equals both average variable cost and average total cost. This occurs because when the marginal cost is at its minimum, it corresponds to the point where average variable cost and average total cost are also at their minimums.

For example, if a firm is producing at a level where the marginal cost is equal to the average variable cost and average total cost, it implies that the firm is operating at an efficient level of production.