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The marginal cost first decreases and then increases because of the law of diminishing returns. Initially, as more units are produced, the cost per unit decreases due to economies of scale. However, after a certain point, additional units may require more resources or become less efficient, causing the cost per unit to increase.
What else can I help you with?
What are the benefits of Marginal cost?
At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.
What happens to average variable cost if the marginal cost is less than it?
If the marginal cost is less than the average variable cost, the average variable cost will decrease.
What should a monopoly do if marginal revenue exceeds marginal cost?
increase output
What should the firm do if marginal revenue is greater than marginal cost?
If a firm's marginal revenue is greater than its marginal cost, it should increase production to maximize profits.
How does the law of diminishing marginal productivity affect the cost of productions?
When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.
What is maginal cost?
Marginal cost is the increase or decrease in the total cost of a production run for making one additional unit of an item.
Does the after tax cost of a deductible expense increase or decrease as the taxpayer's marginal income tax rate increases?
Decrease The higher the marginal rate, the more a person or firm is shielded from expenses.
What is the Importance of marginal costing in decision making?
Marginal cost is change in total cost due to increase or decrease one unit or output. It is technique to show the effect on net profit if we classified total cost in variable cost and fixed cost.
A perfectly competative firms marginal cost exceeds its marginal revenue at its current output To increase its profit the firm will?
To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
What are the benefits of Marginal cost?
At first, marginal cost decreases due to specialization of workers. Then, MC begins to increase steadily. The only benefits of MC are in the period of specialization.
What happens to average variable cost if the marginal cost is less than it?
If the marginal cost is less than the average variable cost, the average variable cost will decrease.
What should a monopoly do if marginal revenue exceeds marginal cost?
increase output
If Kevin has a marginal cost equal to 2 if the market price is 3 should Kevin increase or decease?
decrease cause the number is coming up
What should the firm do if marginal revenue is greater than marginal cost?
If a firm's marginal revenue is greater than its marginal cost, it should increase production to maximize profits.
How does the law of diminishing marginal productivity affect the cost of productions?
When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.
When is average cost minimized?
Average cost is minimized when marginal cost equals average cost. This occurs at the output level where the cost of producing one additional unit (marginal cost) is equal to the average cost of all units produced. At this point, producing additional units would either increase or decrease the average cost, indicating that the minimum average cost has been reached.
