# Why does the marginal cost curve always intersect with the average total cost curve at its lowest point?

The marginal cost curve always intersects the average total cost curve at its lowest point because the marginal cost of making the next unit of output will always affect the average total cost. As a result, so long as marginal cost is less than average total cost, average total cost will fall. Eventually, the marginal cost of producing another unit will be greater than the average total cost and then the average total cost curve will start to rise.

Kale Emmerich | Certified Educator

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The marginal cost curve and the average total cost curve are both graphical representations of the changing cost of producing a product in business. The marginal cost measures the difference in cost of producing individual pieces or products, while the average total cost is just an overall average of how much each part cost.

As the marginal cost approaches the average total cost curve, the average total cost is decreasing, because it is still producing pieces at a value less than the average total cost. However, there comes a point when average total cost is equal to marginal cost, which is where the graphs meet. At this point, marginal cost will become larger than average total cost, meaning each new product will increase the overall average cost of parts produced. At this point the average total cost will continue to increase as well.

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Ashly Hintz | Certified Educator

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The short answer of this is that when the marginal cost is equal to the average total cost, the average total cost will begin increasing. When producing a product, the marginal cost of each piece is the additional cost of each subsequent piece, whereas the average total cost is the total cost divided by the number of pieces produced. When the cost to produce the next piece is equal to average total cost you have reached an equilibrium. However, when your marginal cost is higher than the average total cost, each new piece produced will increased the overall average, as a basic principle of math. Because of this, after the two lines have intersected, the Average Total Cost Curve will inflect and begin to turn upward, while the Marginal Cost Curve will continue to rise as well.

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Tim Mbiti | Certified Educator

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Marginal cost is the cost incurred in producing one more unit, and it is solely affected by variable costs. Marginal cost can be calculated by getting the change in total cost when one unit is produced or added. The cost is also affected by...

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