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WAEC Economics 2000 Question 26

Question 26

Theory of Costs and Revenue

Average Variable Cost (AVC) curve

  1. A.is U-shaped
  2. B.rises from left to right
  3. C.slopes upwards
  4. D.is horizontal to the X-axis.
Show the answer and explanation

Answer: A (is U-shaped)

Explanation

AVC first falls (increasing returns) and then rises (diminishing returns), giving a U shape.