A theoretical restriction on the short-run cubic cost equation,TVC = aQ + bQ + cQ²,is A)a 0,b 0,c 0 B)a 0,b 0 C)a 0,b 0,c 0,b

Question

A theoretical restriction on the short-run cubic cost equation,TVC = aQ + bQ + cQ²,is A)a > 0,b > 0,c > 0 B)a > 0,b < 0,c > 0 C)a > 0,b > 0,c < 0 D)a > 0,b < 0,c < 0

Quizplus · Accepted Answer

In a short-run cubic cost equation, the linear term (b) is often negative to reflect decreasing marginal costs initially, while the quadratic term (c) is positive to reflect increasing marginal costs at higher levels of output.

A Theoretical Restriction on the Short-Run Cubic Cost Equation,TVC =