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  Marginal and average cost relationship

Relationship between marginal and average cost curves:

The relationship among the marginal and average cost is much more than a mathematical one instead of economic.

The relationship can be specified as shown below:

266_marginal & average relationship.jpg

1) Whenever marginal cost is less than the average cost, then average cost is falling.

2) Whenever marginal cost is more than the average cost, then average cost is rising.

3) The marginal cost curve should cut the average cost curve at AC’s minimum point from beneath. Therefore at the minimum point of AC, MC is equivalent to AC.

 

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