Much of the empirical evidence on the behavior of costs for real-world firms suggests that:
A)average costs functions are U-shaped as suggested by economic theory.
B)for most firms, marginal costs are declining in the range in which the firms operate.
C)for many firms, marginal and average variable costs are constant over wide ranges of output.
D)there is no relationship between the marginal and average variable costs of production.

Question

Quizplus · Accepted Answer

Empirical evidence often shows that for many firms, both marginal and average variable costs tend to remain constant over a wide range of output levels, rather than strictly following the traditional U-shaped cost curves suggested by economic theory. This reflects the real-world flexibility and efficiency of production processes up to a certain capacity.

Much of the Empirical Evidence on the Behavior of Costs