If a factory has a short-run capacity constraint (e.g., an auto plant can only produce 800 cars per day at maximum capacity), the marginal cost of production becomes ________ at the capacity constraint.
A) infinite
B) zero
C) highly elastic
D) less than the average variable cost

Question

Quizplus · Accepted Answer

When a factory reaches its maximum capacity, it cannot produce any more goods. This means that any additional unit produced would require more resources beyond the current capacity, resulting in a steep increase in the marginal cost of production. In the case of a short-run capacity constraint, the marginal cost of production would become infinitely high at the capacity constraint, making it impossible to produce additional units. Therefore, the correct answer is A.

If a Factory Has a Short-Run Capacity Constraint (E