Ulterior Votives, LLC produces candles in a perfectly competitive market. It has a production function that exhibits diminishing marginal product.

Which of the following best describes this firm's short-run marginal cost curve $(M C) ?$

Choose 1 answer:
(A) $M C$ is constant for all quantities produced.
(B) $M C$ is horizontal.
(c) $M C$ slopes upward as output increases.
(D) $M C$ slopes downward and becomes steeper as output increases.
(E) $M C$ slopes downward as output increases for all quantities produced.

Question

Ulterior Votives, LLC produces candles in a perfectly competitive market. It has a production function that exhibits diminishing marginal product.

Which of the following best describes this firm's short-run marginal cost curve $(M C) ?$

Choose 1 answer:
(A) $M C$ is constant for all quantities produced.
(B) $M C$ is horizontal.
(c) $M C$ slopes upward as output increases.
(D) $M C$ slopes downward and becomes steeper as output increases.
(E) $M C$ slopes downward as output increases for all quantities produced.

Accepted Answer

∻Solution∻ ‖ a ⋮ Diminishing Marginal Product: The production function exhibits diminishing marginal product, meaning that as more units of input are added, the additional output produced from each additional unit of input decreases. ‖ ‖ b ⋮ Marginal Cost Behavior: In the short run, the marginal cost (MC) curve is influenced by the marginal product of labor. As the marginal product of labor decreases, the marginal cost of production increases. ‖ ‖ c ⋮ Upward Sloping MC Curve: Given the diminishing marginal product, the MC curve will slope upward as output increases. This is because each additional unit of output requires more input, increasing the cost of production. ‖ ∻Answer∻ ⚹ (C) $M C$ slopes upward as output increases. ⚹ ∻Key Concept∻ ⚹ Diminishing Marginal Product ⚹ ∻Explanation∻ ⚹ As the marginal product of labor decreases, the marginal cost of production increases, resulting in an upward-sloping marginal cost curve. ⚹◊What is the relationship between the production function exhibiting diminishing marginal product and the shape of the short-run marginal cost curve in perfectly competitive markets?⍭ Generate me a similar question◊

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