The reason the marginal cost curve eventually increases as output increases for the typical firm is because:
A)of diseconomies of scale.
B)of minimum efficient scale.
C)of the law of diminishing returns.
D)normal profit exceeds economic profit.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more units of a variable input (like labor) are added to fixed inputs (like machinery), the additional output produced from each new unit of input will eventually decrease. This principle explains why the marginal cost curve increases after a certain point of production, as it becomes more costly to produce additional units of output due to less efficient use of inputs.

The Reason the Marginal Cost Curve Eventually Increases as Output