In short run cost analysis, from which side does the short run marginal cost curve cut the short run average cost curve at its minimum point?

Introduction / Context:
In microeconomics, the relationship between different short run cost curves is a very common examination topic. In particular, students are often asked to remember how the short run marginal cost (SRMC) curve interacts with the short run average cost (SRAC) curve at its minimum point. Understanding this intersection gives insight into how marginal decisions influence average outcomes in production and cost analysis for firms.

Given Data / Assumptions:

• We are dealing with short run cost curves where at least one factor of production is fixed.
• The short run average cost curve is assumed to be U shaped because of initially falling and then rising average costs.
• The short run marginal cost curve is also assumed to be U shaped.
• We are asked about the point of intersection at the minimum of the short run average cost curve.

Concept / Approach:
The key idea is the general rule that whenever a marginal magnitude is less than an average magnitude, the average falls, and whenever the marginal is greater than the average, the average rises. The average reaches its minimum exactly when the marginal equals the average. Applied to cost curves, the short run marginal cost equals the short run average cost at the minimum point of the SRAC curve, and the SRMC curve cuts the SRAC curve from below at that point.

Step-by-Step Solution:
1. Consider the falling part of the SRAC curve. Here the marginal cost is less than average cost, so each additional unit produced pulls the average down.2. As output increases, marginal cost eventually rises and meets average cost exactly at the minimum point of the SRAC curve.3. At that minimum point, SRMC equals SRAC and the marginal cost curve must cross the average cost curve.4. Because before the minimum SRMC is below SRAC and after the minimum SRMC is above SRAC, the SRMC curve comes from below and then moves above.5. Therefore, at the minimum of the SRAC curve, the SRMC curve cuts the SRAC curve from below.

Verification / Alternative check:
A useful analogy is average marks and marks in the next exam. If the next mark (marginal mark) is less than the current average, the average falls. If the next mark is higher, the average rises. The average is at its lowest turning point just when the next mark equals the average and is rising from a lower value. This mirrors the behaviour of SRMC and SRAC and confirms that SRMC must cross SRAC from below at the minimum point.

Why Other Options Are Wrong:
Option A: Cutting from the top would imply that marginal cost is above average cost before the minimum, which contradicts the rule that the average falls when marginal is below the average.
Option C: Cutting from the right side is not a meaningful description in terms of economic geometry and does not reflect the standard diagram of cost curves.
Option D: Cutting from the left side is again not how the relationship between marginal and average cost is described in theory.
Option E: Saying that SRMC never cuts SRAC at the minimum point is incorrect because their equality at the minimum point is a core result of cost theory.

Common Pitfalls:
Many learners confuse short run average variable cost with average total cost, but the same logic applies to both. Another common mistake is to think that marginal cost cuts from above because they imagine the curve coming down from a high point, but the mathematical rule about averages ensures that the marginal cost curve must cross from below at the minimum of the average cost curve. Remember to connect the geometric diagram with the average and marginal rule to avoid this confusion.

Final Answer:
The short run marginal cost curve cuts the short run average cost curve from below at the minimum point of the short run average cost curve.