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Which of the following is correct ?
ATC & AVC never intersect each other
ATC is greater than AVC by the amount of AFC
MC cuts AVC at its minimum point
All of these
- Option 1: ATC and AVC never intersect. This is true because ATC (Average Total Cost) is the sum of AVC (Average Variable Cost) and AFC (Average Fixed Cost). Since AFC is always positive, ATC is always above AVC.
- Option 2: ATC is greater than AVC by the amount of AFC. This is correct because ATC = AVC + AFC, meaning the difference between ATC and AVC is AFC.
- Option 3: MC cuts AVC at its minimum point. This is true because the Marginal Cost (MC) curve typically intersects the AVC curve at the lowest point of the AVC curve.
- Option 4: All of these. Since the first three statements are correct, this option is also correct.
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