In the factory, when we add one more unit, the marginal cost pulls the average like a younger brother tugging at his elder's sleeve. If the marginal is below the average, it brings the average down; the moment it rises above, it pulls the average up. So, they must meet at the very bottom.
I see it when we calculate the cost per component batch. Our lowest average cost always happens when the cost of the next batch just starts to sting, like the last stretch of overtime before fatigue truly sets in—that’s where the lines cross on my rough sheet. It’s the same for variable costs, where the shadow of raw material prices meets the reality of our daily output.
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