Ashley Bakery expects its marginal cost curve will eventually slope upward because,as with most production processes,baking has:
A)constant opportunity costs.
B)a maximum output.
C)diminishing marginal returns.
D)decreasing opportunity costs.

Question

Quizplus · Accepted Answer

Baking, like most production processes, experiences diminishing marginal returns, meaning that as more units are produced, the marginal cost of each additional unit increases. This causes the marginal cost curve to eventually slope upward. Constant opportunity costs (A) and decreasing opportunity costs (D) are not necessarily true statements about the baking process. While baking may eventually reach a maximum output (B), this is not directly related to the shape of the marginal cost curve.

Ashley Bakery Expects Its Marginal Cost Curve Will Eventually Slope