Login

why does ac cuts mc at its lowest point?

there is a close relationship between AC curve and  MC curve.

MC=(change)TC/(change)Q and AC=TC/Q;Where TC=Total Cost and Q=output

when MC<AC,then AC falls

when MC=AC then ac is constant

when MC>AC then ac rises

 MC Curve lies below AC Curve and then rises 

therefore, MC curve always intersect AC at its lowest point

  • -1
View Full Answer

thank u!!!

  • -2

Average cost curve cut marginal cost curve because it show's the profit earned by the seller. When  average cost curve cut marginal cost curve, the remaining region will profit. It is assumed that production take place when average cost curve cut marignal cost curve.

  • 1
What are you looking for?