Asked by Ricky Moore on May 01, 2024
Verified
Refer to Table 13-9. For the firm whose production function and costs are specified in the table, its average-variable-cost curve is
A) constant.
B) decreasing.
C) increasing.
D) U-shaped.
Labor
Describes the use of human physical and mental capabilities in creating products and services.
Average-Variable-Cost Curve
The average-variable-cost curve graphs the unit variable cost against the level of output, typically showing a U-shaped curve due to economies and diseconomies of scale.
Variable Cost
Costs that change in proportion to the level of goods or services that a business produces.
- Ascertain the mean total expense, mean fixed expense, and mean variable expense from the data given.
- Analyze and interpret various cost curves and their shapes in the context of production and cost analysis.
Verified Answer
AA
Abdullah AladibMay 03, 2024
Final Answer :
C
Explanation :
The average variable cost (AVC) is calculated by dividing the variable cost by the output. As the number of workers increases from 1 to 5, the variable cost increases, but the rate of increase in output decreases. This leads to an increasing AVC, as each additional unit of output costs more in variable costs than the previous one.
Learning Objectives
- Ascertain the mean total expense, mean fixed expense, and mean variable expense from the data given.
- Analyze and interpret various cost curves and their shapes in the context of production and cost analysis.