A variable cost function of the form: VC = 52 + 2Q + 3Q² implies a marginal cost curve that is A)constant. B)upward sloping. C)U-shaped. D)quadratic.

Question

Quizplus · Accepted Answer

The marginal cost (MC) is the derivative of the variable cost (VC) with respect to output (Q): MC = dVC/dQ = 2 + 3². This means that the slope of the MC curve is positive (two or more inputs are used in production, and at least one input has a positive price) and may depend on the values of the parameters S1, U1, P12, S1, and P0. However, the MC curve is not constant (since there are variable costs) or U-shaped or quadratic (since these shapes would require second-order or higher derivatives of the VC function). Therefore, the only valid option is B, upward sloping.

A Variable Cost Function of the Form: VC = 52