Question

Draw a curve that shows that initially the cost of a good decreases the higher the quantity produced, but at some point the cost starts to increase instead. Put cost on the vertical axis and quantity on the horizontal axis. Label the curve "cost".

Answer 1

In the graph below the cost on the vertical axis and quantity on the horizontal axis. Lets assume that a firm is producing in short, initially we can observe that cost curve is decreasing it shows that cost is decreasing as quantity produced by producer increases it is because of increasing return to factor, at Quantity 30 the lowest point achieve where constant return to scale takes place and after that cost curves starts to rise it means that producer's cost on producing more units are rising it is due diminishing return to a factor.

Quantity	Cost
10	40
20	30
30	20
40	30
50	40