Graph 13-2
This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s).
-Refer to Graph 13-2. Identify the true statements from the list below. (i) diminishing marginal product for all levels of input usage
(ii) total output increases but at a decreasing rate
(iii) the slope of the production function increases as quantity of inputs increase.

Question

Graph 13-2
  This graph depicts a total cost function for a firm that produces cookies. Use the graph to answer the following question(s).
-Refer to Graph 13-2. Identify the true statements from the list below. (i) diminishing marginal product for all levels of input usage
(ii) total output increases but at a decreasing rate
(iii) the slope of the production function increases as quantity of inputs increase.

Quizplus · Accepted Answer

From the graph, we can see that as the quantity of inputs increase, the total output still increases but at a decreasing rate (so statement (ii) is true). Also, since the total cost function is upward sloping (which is the derivative of the production function), we know that the slope of the production function decreases as the quantity of inputs increase (so statement (iii) is also true). Therefore, the best choice is (B) which includes both statements (ii) and (iii). Statement (i) is not true as we cannot determine anything about the marginal product from the given graph.

Graph 13-2 This Graph Depicts a Total Cost Function for Function