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The marginal cost increases as production levels rise because of diminishing returns. This means that as more units are produced, the additional cost of producing each additional unit also increases. This is due to factors such as limited resources, increased labor costs, and inefficiencies in the production process.

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5mo ago

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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.


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When a firm's marginal revenues are higher than its marginal cost?

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To determine the marginal cost of a product or service, you can calculate the change in total cost when producing one additional unit. This can be done by dividing the change in total cost by the change in quantity produced. The marginal cost helps businesses make decisions about pricing and production levels.


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