What is true of marginal cost when marginal returns are increasing?
A)It is negative and increasing.
B)It is negative and decreasing.
C)It is positive and increasing.
D)It is positive and decreasing.
E)It is positive and has a constant slope.

Question

Quizplus · Accepted Answer

When marginal returns are increasing, it means that each additional unit of input is having a greater impact on output, leading to a decrease in marginal cost. However, as the law of diminishing marginal returns sets in, the marginal returns start decreasing, and the marginal cost increases. Therefore, marginal cost is positive and decreasing.

What Is True of Marginal Cost When Marginal Returns Are