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JAMB Economics 1993 Question 10

Question 10

Theory of Costs and Revenue

In the theory of production and cost, the average total cost of a firm is minimized when the marginal cost curve cuts the average total cost curve at its

  1. A.lowest point
  2. B.middle point
  3. C.maximum point
  4. D.downward sloping section
Show the answer and explanation

Answer: A (lowest point)

Explanation

MC always cuts ATC at ATC's lowest point: below it MC pulls ATC down, above it MC pushes ATC up.