In (a)total cost TC is the vertical sum of fixed cost FC and variable cost VC. In (b)average total cost ATC is the sum of average variable cost AVC and average fixed cost AFC. Marginal cost MC crosses the average variable cost and average total cost curves at their minimum points. Note:Recall that AC=TC/Q.It follows that, △AC/△Q=IQ(△TC/△Q)-TC]/Q2=(MC-AC)/Q Clearly,when AC is increasing and MC >AC,AAC/AQ is positive. Correspondingly,when AC is decreasing and MC<AC,AAC/AQ is negative. Copyright by CaidonghongCopyright by Caidonghong In (a) total cost TC is the vertical sum of fixed cost FC and variable cost VC. In (b) average total cost ATC is the sum of average variable cost AVC and average fixed cost AFC. Marginal cost MC crosses the average variab1e cost and average total cost curves at their minimum points. Note: Recall that AC = TC/Q. It follows that, △AC/△Q = [Q(△TC/△Q) – TC]/Q2 = (MC-AC)/Q Clearly, when AC is increasing and MC >AC, △AC/△Q is positive. Correspondingly, when AC is decreasing and MC<AC, △AC/△Q is negative