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Relationship between Marginal Cost and Average Total Cost
The marginal cost (MC) curve has a critical relationship with the average total cost (ATC) curve. The MC curve intersects the ATC curve at the ATC's lowest point. When marginal cost is less than average total cost (MC < ATC), the average total cost is decreasing. Conversely, when marginal cost is greater than average total cost (MC > ATC), the average total cost is increasing. This relationship is fundamental to determining a firm's profit-maximizing output and shutdown point.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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