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Explain the relationship between Marginal Cost and Average total cost

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Chapter-3 (Production and Costs)-Lesson-5 (Concepts of Costs, Shapes of Cost Curve in Short Run and Long Run)-under the topic Relationship between AFC, AVC, AC and MC Curves

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ATC means ACso the

1] both AC and MC are derived from TC by the formulas: AC=TC/Q and MC = change in TC/change in Q

2] both AC and MC curves are U-shaped refelecting law of variable proportion.

3]when AC is falling then MC is below AC.

4] when AC is rising then MC is above AC.

5] when ACis neither rising nor falling then MCis equal to AC.

6] MC curve cuts AC at its minimum point.

7] AC includes both variable cost and fixed cost as AC = AFC+AVC but MC is addition made only to variable costs when output is increased by one more unit.

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