Short-run marginal cost eventually increases with increasing output because:
A) eventually marginal returns will diminish.
B) not all variable inputs increase at the same rate.
C) diseconomies of scale usually set in immediately.
D) of diseconomies of scope.
E) eventually diseconomies of scale set in.

Question

Quizplus · Accepted Answer

In the short run, as output increases, the marginal returns on variable inputs (like labor) diminish because the fixed inputs (like machinery) cannot be adjusted. This leads to an increase in the marginal cost of producing additional units of output.

Short-Run Marginal Cost Eventually Increases with Increasing Output Because