The correct answer is: A. Average cost is the lowest.
Average cost is equal to marginal cost at the point where average cost is the lowest. This is because marginal cost is the additional cost of producing one more unit of output, while average cost is the total cost divided by the number of units produced. When marginal cost is equal to average cost, the additional cost of producing one more unit is equal to the average cost of all the units that have already been produced. This means that the average cost is not increasing or decreasing, and it is therefore at its lowest point.
Option B is incorrect because marginal cost is not always the lowest at the point where average cost is equal to marginal cost. For example, if the marginal cost curve is U-shaped, then the marginal cost will be lowest at a point where it is not equal to the average cost.
Option C is incorrect because marginal cost is not always falling at the point where average cost is equal to marginal cost. For example, if the marginal cost curve is horizontal, then the marginal cost will not be falling at the point where it is equal to the average cost.
Option D is incorrect because the average cost is equal to the marginal cost at a specific point, not at all points.