The marginal cost curve:
A)Usually declines initially as output increases and then rises with further increases in output
B)Is equal to the average variable cost curve
C)Usually rises initially as output increases and declines with further increases in output
D)Is always constant

Question

​The marginal cost curve:
A)​Usually declines initially as output increases and then rises with further increases in output
B)Is equal to the average variable cost curve
C)Usually rises initially as output increases and declines with further increases in output
D)​Is always constant

Quizplus · Accepted Answer

The marginal cost curve usually declines initially as output increases due to economies of scale, but eventually rises with further increases in output due to diseconomies of scale. This is because initially, as output increases, fixed costs are spread over a larger amount of output, reducing the marginal cost. However, at a certain point, additional units of output require more resources and costs, leading to an increase in marginal cost.

​The Marginal Cost Curve

The Marginal Cost Curve