[amp_mcq option1=”Straight line” option2=”Circular” option3=”Parabola” option4=”Rectangular hyperbola” correct=”option1″]<\/p>\n
The correct answer is A. Straight line.<\/p>\n
The average cost curve is a graph that shows the average cost of producing a product at different levels of output. The average cost curve is U-shaped, which means that it starts out low, then increases, and then decreases again. The reason for this is that when a firm produces a small amount of output, its average cost is high because it has to spread its fixed costs over a small number of units. As the firm produces more output, its average cost decreases because it can spread its fixed costs over a larger number of units. However, at some point, the firm’s average cost will start to increase again because it will have to start using more expensive inputs, such as more skilled workers or more expensive materials.<\/p>\n
Option B is incorrect because a circular curve would not be able to capture the U-shaped nature of the average cost curve. Option C is incorrect because a parabola would also not be able to capture the U-shaped nature of the average cost curve. Option D is incorrect because a rectangular hyperbola would not be able to capture the U-shaped nature of the average cost curve.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Straight line” option2=”Circular” option3=”Parabola” option4=”Rectangular hyperbola” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-44670","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n