The Marginal Cost Curve Slopes Downward at Low Outputs Because

question 19

Multiple Choice

The marginal cost curve slopes downward at low outputs because of ________.The marginal cost curve eventually slopes upward because of ________.

• A)greater specialization and division of labour;the law of diminishing returns
• B)the law of diminishing returns;increasing average fixed cost
• C)falling average fixed cost;the law of diminishing returns
• D)the law of diminishing returns;greater specialization and division of labour
• E)greater specialization and division of labour;rising average fixed cost

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Definitions:

MC

Marginal Cost, the increase or decrease in the total cost of a production run for making one additional unit of an item.

Long Run

A period in economic analysis where all factors of production can be varied, and no inputs are fixed.

Shut Down

The process of ceasing operations, often temporarily, due to various reasons like lack of demand, financial trouble, or external circumstances.

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.