Question

Marginal cost curve and average cost curve, both are of which shape?

• A. Inverted 'U' shaped
• B. Parallel to x-axis
• C. Inverted 'S' shaped
• D. None of these

Hint:

In the short run, both the marginal cost and average cost curves typically take an inverted 'U' shape.

Answer 1

The Correct Option is A

Step 1: Understanding cost curves.
The marginal cost (MC) curve and average cost (AC) curve typically have an inverted 'U' shape, meaning they first decline and then rise as output increases. This shape reflects economies of scale at lower levels of output and diseconomies of scale at higher levels of output.

Step 2: Analyzing the options.
(A) Inverted 'U' shaped: Correct. Both the marginal cost curve and average cost curve typically have this shape in the short run.
(B) Parallel to x-axis: This is incorrect because cost curves do not run parallel to the x-axis. They typically have a U-shape or inverted U-shape.
(C) Inverted 'S' shaped: This is incorrect, as the typical cost curves are not shaped like an 'S'.
(D) None of these: This is incorrect because the correct answer is (A) Inverted 'U' shaped.

Step 3: Conclusion.
The correct answer is (A) Inverted 'U' shaped, as both the marginal cost and average cost curves generally follow this pattern.