Asked by Taniya Banks on Jun 26, 2024
Verified
A cubic cost function implies:
A) linear average fixed cost curve.
B) linear marginal cost curve.
C) a U-shaped average cost curve.
D) all of the above
Cubic Cost Function
A cost function where total costs are a cubic function of output levels, allowing for complex relationships between cost and output.
- Acquire insight into the relationship between production efficiency and cost curves, including average and marginal types.
Verified Answer
ZK
Zybrea KnightJul 02, 2024
Final Answer :
C
Explanation :
A cubic cost function is one where the total cost equation is a cubic function of output. This means that the marginal cost curve is quadratic (the derivative of a cubic function) and the average cost curve is U-shaped (the ratio of a cubic function to output). Therefore, the correct choice is C, a U-shaped average cost curve. The other choices are incorrect.
Learning Objectives
- Acquire insight into the relationship between production efficiency and cost curves, including average and marginal types.