<Li> Average Variable Cost (AVC) = VC / Q . </Li> <Li> ATC = AFC + AVC </Li> <Li> The MC curve is related to the shape of the ATC and AVC curves: <Ul> <Li> At a level of Q at which the MC curve is above the average total cost or average variable cost curve, the latter curve is rising . </Li> <Li> If MC is below average total cost or average variable cost, then the latter curve is falling . </Li> <Li> If MC equals average total cost, then average total cost is at its minimum value . </Li> <Li> If MC equals average variable cost, then average variable cost is at its minimum value . </Li> </Ul> </Li> <Ul> <Li> At a level of Q at which the MC curve is above the average total cost or average variable cost curve, the latter curve is rising . </Li> <Li> If MC is below average total cost or average variable cost, then the latter curve is falling . </Li> <Li> If MC equals average total cost, then average total cost is at its minimum value . </Li> <Li> If MC equals average variable cost, then average variable cost is at its minimum value . </Li> </Ul>

The best explanation for the shape of a short run marginal cost schedule is