Asked by
Junior Martinez
on Oct 25, 2024
Verified
The key assumption required for us to use a linear variable cost function of the form VC = bq is that:
A) marginal cost must be constant and equal to b.
B) marginal cost must be increasing at rate b.
C) fixed costs must be zero.
D) marginal cost is always greater than average variable cost.
Linear Variable Cost Function
A mathematical expression that describes how total variable costs change with changes in the quantity of output.
Marginal Cost
The cost incurred by producing one more unit of a good or service.
Constant
A value that does not change.
- Acquire knowledge on the impact of distinct cost functions on the calculation of marginal costs.
Verified Answer
KM
Learning Objectives
- Acquire knowledge on the impact of distinct cost functions on the calculation of marginal costs.