Asked by Maegan Cantu on Jul 02, 2024
Verified
Marginal cost typically ________ and marginal revenue typically _________ with increasing output.
A) rises;falls
B) falls;rises
C) rises;rises
D) falls;falls
Marginal Cost
Marginal cost is the cost of producing one additional unit of a product or service, a crucial concept in economics for determining optimal production levels and pricing strategies.
Marginal Revenue
The surplus earnings acquired through the sale of an extra product or service unit.
Increasing Output
The process of raising the quantity of goods or services produced by a company or economy, often aiming for higher efficiency and profitability.
- Evaluate the role of marginal costs and revenues in determining production decision-making.
Verified Answer
WC
Waynisha Coleman7 days ago
Final Answer :
A
Explanation :
Marginal cost refers to the cost of producing an additional unit of output. As output increases, businesses typically need to invest in additional resources or labor, causing the marginal cost to rise. On the other hand, marginal revenue refers to the revenue generated from producing and selling an additional unit of output. As businesses produce more output, they can often benefit from economies of scale and charge a higher price for their goods, causing marginal revenue to fall. Therefore, the correct answer is A) rises; falls.
Learning Objectives
- Evaluate the role of marginal costs and revenues in determining production decision-making.