Which of the following is an inverted U-shaped curve?

Average cost

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Marginal cost

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Total cost

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Fixed cost

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Solution

The correct option is A Average cost
The average cost is U-shaped because an increase in output increases the returns and reduces the total cost. As the curve continues to slope downwards, it enters a phase of constant returns where the returns and output are at their optimum level.

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MP curve is an inverted U-shaped curve.

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