Question
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
Solution
For this see Fig. 3.8 in Q. 3.16 and the relationship between MC (i.e. SMC) and AVC in part Accordingly as long as AVC is falling, SMC must be less than AVC and as AVC rises, SMC must be greater than AVC. So the SMC cuts the AVC from below at the minimum point of AVC.
