Q230
As output increases
A.
MC curve initially falls and then rises
AnswerB.
MC initially rises and then falls
C.
MC continuously rises
D.
None of the above
Answer: Option A
Solution
Answer: Option A
Solution:
As output increases when MC curve initially falls and then rises. The Marginal Cost curve is U shaped because initially when a firm increases its output, total costs, as well as variable costs, start to increase at a diminishing rate. Then as output rises, the marginal cost increases.