Suppose a given marginal cost curve starts out downward sloping and at some level of output turns upward and becomes upward sloping. The point at which it turns upward is the point at which
A)marginal physical product increases.
B)total cost rises.
C)average fixed cost declines.
D)average variable cost is below marginal cost.
E)diminishing marginal returns set in.

Question

Quizplus · Accepted Answer

The point at which the marginal cost curve turns upward is typically where diminishing marginal returns set in. This is because as more units of a variable input are added to a fixed input, the additional output produced by each new unit of input eventually decreases, causing the cost of producing each additional unit (marginal cost) to increase.

Suppose a Given Marginal Cost Curve Starts Out Downward Sloping