If the marginal cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?
A) AFC is rising.
B) AVC is rising.
C) MC AVC.
D) MPL is falling.

Question

If the marginal cost of producing a good is increasing as a firm produces more of the good,then which of the following must be TRUE?
A) AFC is rising.
B) AVC is rising.
C) MC > AVC.
D) MPL is falling.

Quizplus · Accepted Answer

When marginal cost (MC) is increasing, it typically indicates that the marginal product of labor (MPL) is falling, due to diminishing returns.

If the Marginal Cost of Producing a Good Is Increasing