Table 13-5
-Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?
A)Both the production function and total-cost curve are increasing at an increasing rate.
B)Both the production function and total-cost curve are increasing at a decreasing rate.
C)The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate.
D)The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate.

Question

Table 13-5 
-Refer to Table 13-5. Assume that fixed costs are $500, and variable costs are $100 per worker. For this firm, what are the shapes of the production function and the total-cost curve?
A)Both the production function and total-cost curve are increasing at an increasing rate. 
B)Both the production function and total-cost curve are increasing at a decreasing rate. 
C)The production function is increasing at an increasing rate, whereas the total-cost function is increasing at a decreasing rate. 
D)The production function is increasing at a decreasing rate, whereas the total-cost function is increasing at an increasing rate.

Quizplus · Accepted Answer

The production function is increasing at a decreasing rate because of diminishing marginal returns. The total-cost curve is increasing at an increasing rate due to the increasing variable costs associated with each additional unit of labor.

Table 13-5 -Refer to Table 13-5. Assume That Fixed Costs Are $500