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WAEC Economics 2012 Question 18

Question 18

Theory of Costs and Revenue

In the firm's production process, marginal cost

  1. A.falls continuously throughout.
  2. B.falls and later rises.
  3. C.remains unchanged throughout.
  4. D.rises and later falls.
Show the answer and explanation

Answer: B (falls and later rises.)

Explanation

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