The marginal cost curve:

Question

Quizplus · Accepted Answer

The marginal cost curve is indeed U-shaped, reflecting the law of diminishing returns where initially the cost of producing an additional unit falls but then rises as production increases. It rises when the marginal product of labor falls because each additional unit of input produces less output, making it more expensive to produce additional units. It intersects the average total cost curve at its minimum because at that point, the cost of producing one more unit is exactly the same as the average cost, indicating the most efficient scale of production.

The Marginal Cost Curve