Question

Reason for rise in both AP and MP curve is _______

(a) under utilization of the fixed factor
(b) under utilization of the variable
(c) over utilization of the fixed factor
(d) over utilization of the variable ​

Answer 1

Answer is (c) over utilization of the fixed factor

Answer 2

Option (C) Over utilization of the fixed factor is the reason for rise in both AP and MP curve.

Explanation:

AP stands for Average Production

MP stands for Marginal Production

• First AP and MP raise at the increasing level.
• When TP reduces AP and MP declines.
• Fixed cost remains constant up to a certain level of output.
• Over certain level of output both variable cost and fixed cost increases.
• The main reason is the law of diminishing utility.

If fixed cost and variable cost are wrongly applied total cost of the production have been increased.