Why can't marginal cost decrease forever?
A) At some point, firms encounter physical limits of production.
B) Demand is not infinite.
C) Marginal cost can't increase forever either, and there must be symmetry.
D) Marginal cost is always constant.

Question

Quizplus · Accepted Answer

Marginal cost is the additional cost incurred by producing one more unit of a good or service. At some point, firms will hit physical limits of production, such as running out of resources, space, or labor. Once these limits are reached, the marginal cost will start to increase instead of decreasing, as it becomes more difficult and costly to produce additional units. Therefore, marginal cost cannot decrease forever.

Why Can't Marginal Cost Decrease Forever