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Economics (AS & A Level) · May / June 2024 · Paper 32 · Question 4

9708Types of cost, revenue and profit, short-run and long-run production

A firm increases its output, starting from zero. How will this affect its short-run marginal cost (MC), average total cost (ATC) and average fixed cost (AFC)?

  1. AMC fall then rise; ATC fall then rise; AFC fall
  2. BMC fall then rise; ATC rise then fall; AFC rise
  3. CMC rise then fall; ATC fall then rise; AFC fall
  4. DMC rise then fall; ATC rise then fall; AFC rise

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Correct answer: A. MC fall then rise; ATC fall then rise; AFC fall

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