A company manufactures a variety of camp stoves at different locations. The total cost C(x) (in dollars) of producing x camp stoves per week at plant A is shown in the figure. Discuss the graph of the marginal cost function C'(x) and interpret the graph of C'(x) in terms of the efficiency of the production process at this plant. C(x) $100,000 $50,000 500 1,000 Choose the correct answer below. A. The graph of y C'(x) shows that the marginal cost function is positive and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases. B. The graph of y C'(x) shows that the marginal cost function is negative and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases. C. The graph of y C'(x) shows that the marginal cost function is negative and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases. OD. The graph of y C'(x) shows that the marginal cost function is positive and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.7P
Question
A company manufactures a variety of camp stoves at different locations. The total cost C(x) (in dollars) of producing x camp stoves per week at plant
A is shown in the figure. Discuss the graph of the marginal cost function C'(x) and interpret the graph of C'(x) in terms of the efficiency of the
production process at this plant.
C(x)
$100,000
$50,000
500
1,000
Choose the correct answer below.
A. The graph of y C'(x) shows that the marginal cost function is positive and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases.
B. The graph of y C'(x) shows that the marginal cost function is negative and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases.
C. The graph of y C'(x) shows that the marginal cost function is negative and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases.
OD. The graph of y C'(x) shows that the marginal cost function is positive and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases.
Transcribed Image Text:A company manufactures a variety of camp stoves at different locations. The total cost C(x) (in dollars) of producing x camp stoves per week at plant A is shown in the figure. Discuss the graph of the marginal cost function C'(x) and interpret the graph of C'(x) in terms of the efficiency of the production process at this plant. C(x) $100,000 $50,000 500 1,000 Choose the correct answer below. A. The graph of y C'(x) shows that the marginal cost function is positive and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases. B. The graph of y C'(x) shows that the marginal cost function is negative and decreasing. Since marginal costs are decreasing, the production process is becoming more efficient as production increases. C. The graph of y C'(x) shows that the marginal cost function is negative and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases. OD. The graph of y C'(x) shows that the marginal cost function is positive and increasing. Since marginal costs are increasing, the production process is becoming less efficient as production increases.
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