No, AVC curve never intersects ATC. The gap between ATC and AVC is the average fixed cost AFC. If TFC is non-zero, AFC can never be zero. The gap between ATC and AVC will disappear only if AFC is zero.

What is the relationship between ATC and AVC?

Average total cost (ATC) is calculated by dividing total cost by the total quantity produced. The average total cost curve is typically U-shaped. Average variable cost (AVC) is calculated by dividing variable cost by the quantity produced.

Why is there a gap between the ATC curve and the AVC curve?

Why is there such a gap between the ATC curve and the AVC curve and why does that gap get smaller as units increase? gap represents the AVC and the gap gets smaller as units increase due to the spreading effect. This causes the costs to spread over a larger quantity or output.