Figure 13-2
The figure depicts a total cost function for a firm that produces cookies.

-Refer to Figure 13-2.What is the relationship between input and output of a production function
A)Output increases at a decreasing rate with additional units of input.
B)Output increases at an increasing rate with additional units of input.
C)Output decreases at a decreasing rate with additional units of input.
D)Output decreases at an increasing rate with additional units of input.

Question

Figure 13-2
The figure depicts a total cost function for a firm that produces cookies.
 
-Refer to Figure 13-2.What is the relationship between input and output of a production function
A)Output increases at a decreasing rate with additional units of input. 
B)Output increases at an increasing rate with additional units of input. 
C)Output decreases at a decreasing rate with additional units of input. 
D)Output decreases at an increasing rate with additional units of input.

Quizplus · Accepted Answer

The shape of the total cost function in Figure 13-2 indicates that the production function exhibits diminishing marginal returns, meaning that output increases at a decreasing rate with additional units of input.

Figure 13-2 The Figure Depicts a Total Cost Function for a Firm