This graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. The curve labeled A is upward sloping because:

Question

This graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive.  The curve labeled A is upward sloping because:

Quizplus · Accepted Answer

The upward-sloping curve labeled A represents Moe's marginal cost curve. Marginal costs increase as output increases due to diminishing returns to the variable factors of production. This means that as more labor and other variable inputs are added to the production process, the additional output produced by each additional unit of input gradually decreases, leading to higher costs of production. Choices A, C, and D are not correct explanations for the upward slope of the marginal cost curve.

This Graph Shows the Cost Curves for Moe's Mushroom Gathering