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Q: Complete the sentence using the options given below. The short-run marginal cost curve is 'U'-shaped due to _____ .
  • A. more supply of products
  • B. the law of fixed proportions
  • C. the law of variable proportions
  • D. aggregate demand
Correct Answer: Option C - The short-run marginal cost curve (SMC) is 'U'- shaped due to the law of variable proportions. According to the law of variable proportions, MC curve initially slopes downward till it reaches it minimum point and thereafter it starts rising. Therefore it culminates into a U-shape curve when presented graphically.
C. The short-run marginal cost curve (SMC) is 'U'- shaped due to the law of variable proportions. According to the law of variable proportions, MC curve initially slopes downward till it reaches it minimum point and thereafter it starts rising. Therefore it culminates into a U-shape curve when presented graphically.

Explanations:

The short-run marginal cost curve (SMC) is 'U'- shaped due to the law of variable proportions. According to the law of variable proportions, MC curve initially slopes downward till it reaches it minimum point and thereafter it starts rising. Therefore it culminates into a U-shape curve when presented graphically.