Suppose a Firm with the Usual U- Shaped Cost Curves

question 55

Multiple Choice

Suppose a firm with the usual U- shaped cost curves is producing a level of output such that its short- run costs are as follows: ATC = $0.37 per unit AVC = $0.32 per unit AFC = $0.05 per unit MC = $0.43 per unit
Given these short- run costs,as the firm increases its output,which of the following statements is true?

• A)Average product of the variable factor must be increasing.
• B)Marginal product of the variable factor is at its minimum point.
• C)Marginal product of the variable factor must be increasing.
• D)Marginal product of the variable factor must be decreasing.
• E)The point of diminishing average product of the variable factor has not yet been reached.

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Definitions:

Graph Label

Text used in graphs to name axes, identify data series, or annotate information for clarification and understanding.

Maturity

A phase in the product life cycle characterized by a slowdown in sales growth as the product achieves widespread acceptance and market saturation.

Product Life Cycle

The series of stages that a product goes through from its introduction to the market until its decline and eventual withdrawal from the market.

Maturity Stage

A phase in the product life cycle characterized by slowing growth, well-established market presence, and increased competition, requiring strategies for retention and differentiation.