As output increases, marginal cost will eventually
A) increase because of the law of increasing returns.
B) increase because of the law of diminishing returns.
C) decrease because of the law of diminishing returns.
D) decrease because of the law of increasing returns.

Question

Quizplus · Accepted Answer

Marginal cost eventually increases due to the law of diminishing returns, which states that adding more of one factor of production, while holding others constant, will eventually yield lower per-unit returns.

As Output Increases, Marginal Cost Will Eventually