Why does MC cross AVC and ATC at their minimum points?
A marginal value below an average pulls it down and one above pushes it up, so they meet at the minimum.
Follow the cause and effect
Write TC=FC+VC(q) and divide by q for AFC, AVC, and ATC.
Find MC=dTC/dq and its intersections with average curves.
Separate avoidable shutdown costs from long-run costs.
The model you are using
Conditions for this model
q>0 for averages; FC=36 is unavoidable in the short run.
The exam trap
Fixed cost does not change MC but does affect ATC and profit, so it cannot be ignored everywhere.
Connect the reasoning to the graph
What changes
- MC crosses the minima of AVC and ATC, while AFC declines continuously as q rises.
What stays fixed
q>0 for averages; FC=36 is unavoidable in the short run.
Keep these conditions throughout the comparison; change only what the case above specifies.
What to inspect
Separate avoidable shutdown costs from long-run costs.
Compare before and after, and locate the conclusion on the graph.
5 MINUTES · TRANSFER THE IDEA
Can you explain it without the lesson?
Draw the effect of higher fixed cost on MC, AVC, and ATC, identifying unchanged curves.