Asked by Jamiah Hamilton on Sep 24, 2024
Verified
When a firm is experiencing increasing marginal costs,it implies
A) A constant marginal productivity
B) decreasing average costs
C) decreasing marginal productivity
D) increasing marginal productivity
Marginal Costs
Marginal costs refer to the increase or decrease in the total cost of producing one more unit of a good or service.
Marginal Productivity
The additional output that results from employing one more unit of input, such as labor or capital, while keeping other inputs constant.
- Learn about the law of reducing marginal productivity and its influence on the volume of production.
Verified Answer
NR
Nayeli Reyesss5 days ago
Final Answer :
C
Explanation :
Increasing marginal costs typically indicate decreasing marginal productivity. As the firm increases production, it may need to hire more workers or invest in other inputs, but each additional unit of input may yield less output, leading to an increase in marginal cost. This can often result in a U-shaped average cost curve, where costs are initially decreasing but then start to increase as output expands.
Learning Objectives
- Learn about the law of reducing marginal productivity and its influence on the volume of production.