Asked by Spiro Billos on Jun 23, 2024
Verified
Refer to Figure 1.5. In many industries, as firms produce additional units, average costs of production decline as the firm produces an additional unit, but average costs declines by a smaller and smaller amount as production continues to increase. If output is graphed on the horizontal axis and average costs are graphed on the vertical axis, the relationship between average costs and output would be like which of the following Panels?
A) A
B) B
C) C
D) D
Average Costs
This refers to the per-unit production cost, calculated by dividing total costs by the total quantity produced, indicating the efficiency of production.
Output
The total amount of goods or services produced by a firm or economy.
Declines
Refers to a decrease in the value, amount, or quality of something, often observed in economic indicators or market trends.
- Understand the fundamental concepts of cost production and the relationships between consumption in economics.
Verified Answer
IC
Ishwar ChahalJun 25, 2024
Final Answer :
C
Explanation :
Panel C represents a situation where average costs decline as output increases, but the rate of decline diminishes over time. This is consistent with the description of average costs decreasing at a decreasing rate as production expands.
Learning Objectives
- Understand the fundamental concepts of cost production and the relationships between consumption in economics.