Isn’t variable cost marginal cost? Why is AVC higher than MC? I don’t understand the relationship between the MC curve and the AVC curve. Can one of you guys help me out? Thanks.
Ok to restate my question. When the output is 1 unit, shouldn’t AVC be the same as MC?
When the output is 1, AVC = variable cost of producing 1 unit. MC = cost of producing the next unit. MC intersects AVC and ATC at their minimum.
OOOooo thats the little bit i forgot. MC is the production of the NEXT unit… that was a newbie mistake… and thats why I am reviewing. Thanks!