If a firm's marginal costs are increasing as it produces more units, what is the most likely underlying cause for this phenomenon?

When a firm’s marginal costs are increasing as it produces more units, it usually means that the firm is facing diminishing returns. This happens when adding more resources, like workers or machines, leads to less efficient production. For example, if a factory hires more workers but the space and equipment remain the same, these workers might get in each other's way, causing delays and reducing output per worker. As a result, the cost of producing each additional unit goes up because the firm has to spend more on labor and materials without getting as much extra product in return. This concept is important because it helps firms understand how to manage production and costs effectively.