Explain how the value of marginal cost affects the values of average v

Explain how the value of marginal cost affects the values of average variable cost and average total cost and what this means for the relationship between the marginal cost curve and the average variable and total cost curves.

What will be an ideal response?

ANSWER

So long as the value of marginal cost is less than the value of average variable (total) cost, an increase in output will cause average variable (total) cost to decrease. When marginal cost is greater than the value of average variable (total) cost, an increase in output will cause average variable (total) cost to increase. The result is that the the marginal cost curve will intersect the average variable and average total cost curves at their respective minimum points.