AP Microeconomics

Category - Microeconomics

Because of the law of diminishing returns, marginal costs rise as _________ rises.
  1. Demand
  2. Supply
  3. Input
  4. Output
Explanation
Answer - D - Because of the law of diminishing returns, marginal costs rise as output rises.

Key Takeaway: Marginal cost is the amount by which the cost of production increases when one more unit of output is produced. Due to economies of scale, marginal costs rise as output rises. And because of diminishing marginal utility, marginal benefits fall as output increases.
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