Which of the following statements is sequentially correct?
A)Changes in marginal physical product change marginal cost, which changes average variable and average total cost.
B)Changes in marginal cost change marginal physical product, which changes average variable and average total cost.
C)Changes in average variable cost change marginal cost, which changes average total cost, which changes marginal physical product.
D)Changes in average variable and average total cost change marginal cost, which changes marginal physical product.

Question

Quizplus · Accepted Answer

The sequence described in option A is correct because the marginal physical product (the additional output resulting from one more unit of an input) influences the marginal cost (the cost of producing one more unit of a good). Changes in marginal cost, in turn, affect both average variable cost (the variable cost per unit) and average total cost (the total cost per unit). This sequence reflects the basic principles of production and cost in economics.

Which of the Following Statements Is Sequentially Correct