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Shapes of Average and Marginal Cost Curves in the Short Run

Marginal cost...

Question

Marginal cost curve ______ as output increases in the beginning.

A

falls

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B

rises

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C

increases

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D

does not change

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Solution

The correct option is A falls
Marginal cost initially falls in the beginning as there is an under utilization of fixed factors thus employing more variable factors is beneficial and initially output increases and cost falls.

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