Which of the following typically has a U-shaped curve?
A)Average total cost
B)Average fixed cost
C)Fixed cost
D)Total cost
E)A production function

Question

Quizplus · Accepted Answer

Average total cost typically has a U-shaped curve due to the presence of both fixed and variable costs. As output initially increases, fixed costs are spread over a greater quantity of output, leading to a decrease in average total cost. However, as output continues to increase, the firm may experience diminishing marginal returns to its variable inputs, leading to an increase in average total cost. This results in a U-shaped average total cost curve.

Which of the Following Typically Has a U-Shaped Curve