1.
Match the following Physical Product Scenario with its corresponding cost relationship
Potential Matches:
1 : Average Total Cost is increasing (decrease in costs)
2 : Marginal Cost is increasing (decrease in costs)
3 : Average Total Cost is decreasing (decrease in costs)
4 : Marginal Cost is decreasing (decrease in costs)
Answer
: When Average Physical Product is increasing (increasing productivity)
: When Average Physical Product is decreasing (decreasing productivity)
: When Marginal Physical Product is increasing (increasing productivity)
: When Marginal Physical Product is decreasing (decreasing productivity)
Match the following Physical Product Scenario with its corresponding cost relationship
Solution
Basically, when cost increases, it's because of decreasing production quantities.
Average Total Cost is increasing When Average Physical product is decreasing
Marginal Cost is increasing When Marginal Physical product is decreasing
Average Total Cost is decreasing When Average Physical product is increasing
Marginal Cost is decreasing When Marginal Physical product is increasing