The best explanation for the shape of a short run marginal cost schedule is
A) increasing returns to scale.
B) decreasing returns to scale.
C) there is no fixed factor of production.
D) a fixed factor causes diminishing returns to other factors.

Question

Quizplus · Accepted Answer

The shape of a short run marginal cost schedule typically reflects diminishing returns to other factors due to the presence of at least one fixed factor of production. As production increases, the additional output produced from each additional unit of a variable factor (like labor) decreases, leading to higher marginal costs.

The Best Explanation for the Shape of a Short Run