theoretical restriction on the short-run cubic cost equation,TVC = aQ + bQ + cQ²,is A)a 0,b 0,c 0 B)a 0,b 0 C)a 0,b 0,c 0,b

Question

theoretical restriction on the short-run cubic cost equation,TVC = aQ + bQ + cQ²,is A)a > 0,b > 0,c > 0 B)a > 0,b < 0,c > 0 C)a > 0,b > 0,c < 0 D)a > 0,b < 0,c < 0

Quizplus · Accepted Answer

In the short-run cubic cost equation, the coefficient 'b' should be negative to reflect diminishing marginal returns, while 'a' and 'c' should be positive to ensure that total variable cost increases with output and the rate of increase accelerates.

Theoretical Restriction on the Short-Run Cubic Cost Equation,TVC = AQ