As output rises unit by unit, costs ____ relatively ____ at first, but then ____ more ____.
A) decrease; slowly; increase; rapidly
B) decrease; quickly; increase; slowly
C) rise; slowly; increase; rapidly
D) rise; quickly; increase; slowly
E) rise; quickly; increase; quickly

Question

Quizplus · Accepted Answer

This statement refers to the concept of the law of increasing marginal costs. The law states that as output increases, the marginal cost (cost of producing one additional unit) also increases. Therefore, costs rise relatively slowly at first (as fixed costs are spread across more units), but then increase more rapidly as variable costs increase with each additional unit of output. Option C reflects this pattern.  Option A is incorrect because costs do not decrease as output rises. Option B is incorrect because costs do not decrease quickly. Option D is incorrect because costs increase quickly and then slowly, which is the opposite of what the question is asking for. Option E is completely incorrect because it states that costs increase quickly and then increase more quickly, which is not realistic.

As Output Rises Unit by Unit, Costs ____ Relatively ____

As Output Rises Unit by Unit, Costs Relatively