Relationship between Marginal Cost (MC) and Average Cost (AC).

1. Relationship between Marginal Cost (MC) and Average Cost (AC). [based on the above picture]

2. Relationship between Marginal Cost (MC) and Average Variable Cost (AVC). [just change the "AC" to "AVC"]

Example Question : Explain the relationship between marginal cost and average cost. [6 marks]

suggestion answer:

•  Diagram 2 marks
• explanation = 4 marks