When the marginal cost for a monopoly firm is constant,the average cost curve is _____.
A)U-shaped
B)horizontal
C)positively sloped
D)non-linear

Question

Quizplus · Accepted Answer

When the marginal cost (MC) curve is constant, it remains flat or horizontal. Since the average cost (AC) curve is derived from the total cost (TC) by dividing it with the quantity produced, a horizontal MC curve indicates that the addition of each unit of output does not affect the total cost of production. As a result, the TC and AC curves will coincide and also become horizontal, creating a flat average cost curve. Therefore, the correct answer is (B) horizontal.

When the Marginal Cost for a Monopoly Firm Is Constant,the