As a firm produces more of a good, the cost of producing each additional unit de

Question

As a firm produces more of a good, the cost of producing each additional unit decreasesThis implies that the marginal cost of producing a good decreases as you make more of that g ood. The supply curve represents_ A, the minimum price sellers are willing to accept to sell an extra unit of a good. O B. the maximum price sellers are willing to accept to sell an extra unit of a good. ° C. the maximum price buyers are willing to pay to buy an extra unit of a good. 0 D, the minimum price buyers are willing to pay to buy an extra unit of a good.

Explanation / Answer

Normally as firm produces more of a good, the cost of producing each additional unit increases. This implies that the marginal cost of producing a good increases and MC>AC. The supply curve is the minimum price seller are willing to accept for an additional unit of good.

MC is the firms short run supply curve given MC>min of AVC

However, decrease,decrease will be the ans if there is economies of scale in which short run supply curve will be downward sloping.

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