Which of the following explains most accurately why the firm's short-run marginal cost curve will eventually rise?
A) As more of the variable factor is used, its price will rise.
B) When diminishing marginal returns set in, it will take ever-larger quantities of the variable resources to produce an additional unit of output.
C) As the variable factor is used more intensely, its marginal product will rise, causing an increase in marginal costs.
D) As the size of the firm increases, the operational efficiency of the firm declines, causing an increase in marginal costs.

Question

Quizplus · Accepted Answer

In the short run, as more units of a variable factor are added to a fixed factor, diminishing marginal returns occur, requiring more input to produce each additional unit, thus increasing marginal cost.

Which of the Following Explains Most Accurately Why the Firm's