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Why does Marginal cost curve cut the Average Variable Cost Curve at its minimum point? |
| Answer» Solution :It happens because when AVERAGE VARIABLE COST (AVC) FALLS, Marginal Cost (MC) is less than AVC. When AVC starts rising, MC is more than AVC. So, it is only curve cuts AVC is constant and at its minimum point, that MC is equal to AVC. Therefore, MC curve cuts AVC curve at is minimum point. | |