The Marginal Cost Curve Has a U Shape Because

question 8

Multiple Choice

The marginal cost curve has a U shape because

• A)Initially, the marginal product of labour falls, then rises.
• B)Initially, the average product of labour rises, then falls.
• C)Initially, the marginal product of labour rises, then falls.
• D)Initially, the average cost of production rises, then falls.

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Definitions:

Process Cost System

An accounting method used to track production costs for large quantities of identical items by accumulating costs across processes or departments.

Work In Process

Work in process are goods in various stages of production within a factory, not yet completed to become finished goods.

First-In, First-Out

An inventory valuation method where goods first purchased or produced are the first to be sold or used, assuming the earliest inventory costs flow out first.

Conversion Costs

Conversion costs are manufacturing or production costs that include direct labor and overhead expenses, necessary to convert raw materials into finished goods.