Marginal cost _____ over the range of increasing marginal returns and _____ over the range of diminishing marginal returns.
A)increases;decreases
B)decreases;increases
C)is constant;decreases
D)increases;is constant

Question

Quizplus · Accepted Answer

Marginal cost is the cost of producing one additional unit of output. In the range of increasing marginal returns, it means that the cost of producing one more unit decreases, as we can produce the additional unit by using the existing resources more efficiently. Therefore, marginal cost decreases. In the range of diminishing marginal returns, the cost of producing one more unit increases due to the decreased productivity of additional inputs. Therefore, marginal cost increases.

Marginal Cost _____ Over the Range of Increasing Marginal Returns