Asked by Isabella Huynh on May 02, 2024
Verified
As a firm increases production in the short run,the marginal cost of output increases because the marginal product of the variable input decreases.
Marginal Cost
The additional expense associated with manufacturing one more unit of a specific item.
Marginal Product
The additional output that is produced by adding one more unit of a specific input, ceteris paribus.
Variable Input
An input in the production process that can be adjusted in the short term, such as labor or raw materials.
- Comprehend the notion of diminishing returns and how it influences cost and productivity.
Verified Answer
RG
Rowland GallotMay 09, 2024
Final Answer :
True
Explanation :
This is known as the law of diminishing marginal returns, which states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease, leading to an increase in marginal cost.
Learning Objectives
- Comprehend the notion of diminishing returns and how it influences cost and productivity.