An economist observed that as more computers are added to a factory,the costs of production initially decline,reach a minimum,and then rise.In a diagram that has costs on the vertical axis and the number of computers on the horizontal axis,the relationship always is
A) negative and then linear after the minimum point.
B) positive and then negative after the minimum point.
C) negative and then positive after the minimum point.
D) linear and then positive after the minimum point.
E) negative both before and after the minimum point.

Question

Quizplus · Accepted Answer

This is an example of the law of diminishing returns. Initially, adding more computers leads to a decrease in cost due to increased efficiency. However, after a certain point, the additional computers become less productive and may even result in downtime or other costs. This leads to an increase in cost, hence the relationship being negative and then positive after the minimum point.

An Economist Observed That as More Computers Are Added to a Factory,the