A local bakery is deciding whether to produce 50 or 100 loaves of bread. They determine that the marginal cost of producing each additional loaf increases after 50 loaves due to overtime pay for workers. Which category best describes this situation?

In this situation, the bakery is facing a concept called "increasing marginal costs. " This means that as they produce more loaves of bread, specifically after reaching 50 loaves, the cost of making each additional loaf goes up. This happens because they need to pay workers overtime, which adds extra expense. For example, if it costs $1 to produce each of the first 50 loaves but $1. 50 for each loaf after that due to overtime, the bakery needs to consider if the extra loaves will bring in enough additional revenue to cover this increased cost.