Table 13-1

-Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its total-cost curve is
A) constant.
B) increasing at a decreasing rate.
C) increasing at an increasing rate.
D) unknown because there is no relationship between a firm's production function and its total-cost curve.

Question

Table 13-1
 
-Refer to Table 13-1.For the firm whose production function and costs are specified in the table,its total-cost curve is
A) constant. 
B) increasing at a decreasing rate. 
C) increasing at an increasing rate. 
D) unknown because there is no relationship between a firm's production function and its total-cost curve.

Quizplus · Accepted Answer

The firm's total cost curve is increasing at an increasing rate because as output increases, the slope of the total cost curve becomes steeper. This indicates that the marginal cost of production is increasing, which is typical of many production processes. A constant total cost curve would mean that the firm's total cost is the same regardless of how much it produces, which is unlikely. An increasing at a decreasing rate total cost curve would suggest that the marginal cost initially decreases as output increases, but then eventually starts to increase again, which is also uncommon. Therefore, the best choice is C.

Table 13-1 -Refer to Table 13-1.For the Firm Whose Production Function and Whose