Question

Marginal cost curves are often not linear, as we have assumed in this chapter for simplicity. Why might this be
the case? Draw a marginal cost curve for a firm that cannot increase its output beyond 500 units per month

Answer 1

Part A

This shape is illustrative of some genuine bends where the slope at first decreases at that point rises once more. This shape will be seen when, at low degrees of output, the limit of the plant isn't completely utilized. Increments in output in this range will bring down minimal expenses as increasingly more of the limit is utilized. In the end minor costs start to ascend as limit use rises. More data sources must be utilized to create the extra output. The key point is that in the end the negligible cost bend must be upward slanting and may to be sure turned out to be vertical to demonstrate that no more output is conceivable.

Part B