-The table above gives the cost schedule for The X Firm.The data show that The X Firm's ________ curve is ________.
A) ATC; U-shaped because the firm fixed costs are spread over larger amounts of output and the firm experiences decreasing marginal returns
B) AFC; U-shaped because the firm spreads its fixed costs over larger and large amounts of output
C) AVC; always declining because costs are divided across ever-increasing amounts of output
D) MC; U-shaped because explicit costs exceed implicit costs
E) ATC; U-shaped because output increases as costs increase

Question

-The table above gives the cost schedule for The X Firm.The data show that The X Firm's ________ curve is ________.
A) ATC; U-shaped because the firm fixed costs are spread over larger amounts of output and the firm experiences decreasing marginal returns 
B) AFC; U-shaped because the firm spreads its fixed costs over larger and large amounts of output 
C) AVC; always declining because costs are divided across ever-increasing amounts of output 
D) MC; U-shaped because explicit costs exceed implicit costs 
E) ATC; U-shaped because output increases as costs increase

Quizplus · Accepted Answer

The ATC (Average Total Cost) curve is typically U-shaped in the short run due to the spreading out of fixed costs over larger amounts of output (which decreases ATC initially) and the eventual onset of decreasing marginal returns (which increases ATC after a certain point).

-The Table Above Gives the Cost Schedule for the X