Use the following to answer question(s): Short-Run Costs

-(Exhibit: Short-Run Costs) Curve A declines from a cost of about $50 and a quantity of 1 to a cost of about $40 and a quantity of 2 (point F) at which time it rises again.The declining segment is due to ________ marginal returns, and the rising segment is due to _______ marginal returns.
A) decreasing; increasing
B) diminishing; increasing
C) increasing; diminishing
D) increasing; constant

Question

Use the following to answer question(s): Short-Run Costs
 
-(Exhibit: Short-Run Costs) Curve A declines from a cost of about $50 and a quantity of 1 to a cost of about $40 and a quantity of 2 (point F) at which time it rises again.The declining segment is due to ________ marginal returns, and the rising segment is due to _______ marginal returns.
A) decreasing; increasing 
B) diminishing; increasing 
C) increasing; diminishing 
D) increasing; constant

Quizplus · Accepted Answer

The declining segment of the curve indicates increasing marginal returns, as the cost per additional unit decreases. The rising segment indicates diminishing marginal returns, where the cost per additional unit increases.

Use the Following to Answer Question(s): Short-Run Costs