Production functions A and B result in the same average total costs of production.However,production function A is twice as capital intensive as production function B.In this case,all else constant:
A)marginal costs will be higher in A than they are in B.
B)marginal costs will be higher in B than they will in A.
C)because total costs are equal, marginal costs will be equal for the two production functions as well.
D)there is no way to say anything about the relative marginal costs of production in the two production functions without additional information.

Question

Quizplus · Accepted Answer

A more capital-intensive production function typically has lower marginal costs due to economies of scale and the ability to spread fixed capital costs over a larger output.

Production Functions a and B Result in the Same Average