The correct answer is Option (4) → SMC curve cuts the AVC curve from below at the minimum point of SMC.
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As long as AVC is falling, SMC must be less than the AVC. Correct. This is a fundamental rule: when the cost of producing one more unit (marginal cost) is less than the average cost of all units produced so far, the average cost will be pulled down.
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SMC curve cuts the AVC curve from below at the minimum point of AVC. Correct. This is another fundamental rule. The marginal cost curve always intersects the average cost curve at its minimum point. As the marginal cost curve is U-shaped, it must intersect the AVC curve from its bottom, or "from below," as it rises.
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As AVC rises, SMC must be greater than the AVC. This is also a fundamental rule- when the cost of producing one more unit (marginal cost) is greater than the average cost, the average cost will be pulled up. This statement is correct.
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SMC curve cuts the AVC curve from below at the minimum point of SMC. This statement is incorrect. The SMC curve intersects the AVC curve at the minimum point of the AVC curve, not the minimum point of the SMC curve. The minimum of the SMC curve occurs at a lower level of output than the minimum of the AVC curve.
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