Question

If the function in the given figure is a cost function, what can you say about the shape of marginal cost?

• A. Marginal cost first increases and then decreases
• B. Marginal cost first decreases and then increases
• C. Marginal cost is always positive
• D. Marginal cost is always Negative

Answer 1

Answer: (B), (C)

The correct options are
B Marginal cost first decreases and then increases
C Marginal cost is always positive

Function in the given figure is a cost function,From the figure we can say that

The slope of cost curve is marginal cost, as well . As the cost curve has increasing and stepper slope so,

1. Marginal cost first decreases and then increases as the curve goes down first then goes upwards.

2.As the cost curve has a positve slope (that is upward sloping) then marginal cost is always positive.