The marginal cost curve:

Question

Quizplus · Accepted Answer

The marginal cost curve generally falls at first and then rises as output expands. This is because initially, increasing production leads to economies of scale, which means the cost per unit decreases. However, eventually, the law of diminishing returns sets in, and producing additional units becomes more expensive, leading to a rise in marginal cost. Option A is incorrect because a vertical line denotes that even a small change in output causes a significant change in cost, which is not usually the case. Option B is incorrect because it implies that the marginal cost curve always declines at first, which is not necessarily true. Option D is incorrect because the marginal cost curve intersects the average variable cost curve at its minimum point, not its maximum point.

The Marginal Cost Curve