Relationship among AFC, AVC, ATC and MC:

The AFC curve is observed to be a rectangular hyperbola. The ATC (or AC) is also "U" shaped because it is the vertical summation of the AVC and AFC. The AVC attains its minimum at a lower level of output than ATC. In Figure 6.2, the minimum of the AVC

occurs at output level Q2. At this level of output, ATC continues to fall and finally attains its minimum at Q3, which is higher than Q2. Between Q2 and Q3, while AVC is rising AFC continues to fall, but the fall in AFC far outweighs the rise in AVC now outweighs the fall in AFC hence ATC rises. It is observable that when ATC and AVC are falling, MC curve lies below both the ATC and AVC. On the other hand, when ATC and AVC are rising, MC curve lies above the ATC and AVC. MC attains its minimum before AVC and ATC, i.e. at Q1. The MC curve goes through the minimum points of both the AVC and ATC.