As a firm produces more of a good, the cost of producing each additional unit stays the same. This implies that the marginal cost of producing a good does not change as you make more of that good.

Question

Huey

Business

14 June, 04:07

As a firm produces more of a good, the cost of producing each additional unit stays the same. This implies that the marginal cost of producing a good does not change as you make more of that good.

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Demarion Brennan · Answer 1

True : If a firm produces more of a good with each additional unit cost staying same, it implies MC of that good is constant (doesn't change) with more production

Total Cost Curve is straight 45° straight upward sloping curve in this case.

Explanation:

Marginal Cost is the addition to total cost while producing an additional unit of a good. MC = TC n - TC n-1

Total Cost is total expenditure on producing all units of a good. TC = ΣMC

Usually MC is U shape curve - i. e falls first & then increases with increase in production quantity. Then, TC is inverse S shaped curve - i. e increases at a decreasing rate first & then increases at an increasing rate with increasing production quantity If MC is constant, it would be straight horizontal line parallel to X axis. So, TC will be a straight 45° straight upward sloping curve - because it increases at a constant rate.