JAMB Economics 2019 Paper

Concept:The marginal cost ($MC$) curve intersects the average cost ($AC$) curve at the lowest point of the average cost curve.Explanation:In cost theory, the $MC$ and $AC$ curves are closely related.When $MC$ is less than $AC$, the additional cost of producing one more unit pulls the average cost downward.When $MC$ is greater than $AC$, the extra unit pushes the average cost upward.Therefore, the $MC$ curve must cross the $AC$ curve exactly at the turning point where average cost stops falling and begins to rise.That turning point is the minimum or lowest point on the $AC$ curve.At this intersection, $MC$ is exactly equal to $AC$.Hence, the $MC$ curve does not cut the $AC$ curve at its maximum, highest, or peak point.Answer:C. at the minimum point on the $AC$ curve.