Suppose the Marginal Cost Curve in the Short Run First

question 181

Multiple Choice

Suppose the marginal cost curve in the short run first decreases, then reaches a minimum, and then increases.If we are at an output where marginal cost is decreasing, then:

• A)marginal product must be increasing.
• B)average variable cost must be decreasing.
• C)average total cost must be increasing.
• D)marginal product must be increasing and average variable cost must be decreasing.

---

Definitions:

Deadweight Loss

An economic inefficiency that occurs when a market is not in competitive equilibrium, leading to a loss of economic value.

Price Discriminate

A pricing strategy where the same product or service is sold at different prices to different customers, based on their willingness to pay.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are close substitutes, leading to price competition.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total net benefits to society.