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, the higher the price of that factor.
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.
Correct Answer:
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