A firm's short- run marginal cost curve is decreasing when
A)average fixed cost is increasing.
B)total fixed cost is decreasing.
C)marginal product is decreasing.
D)capacity is reached.
E)marginal product is increasing.

Question

Quizplus · Accepted Answer

When the short-run marginal cost curve is decreasing, it means that the firm is experiencing increasing marginal productivity. This indicates that for each additional unit of input, the output is increasing at a faster rate than the cost, thus resulting in a lower marginal cost.

A Firm's Short- Run Marginal Cost Curve Is Decreasing When