📚 Learning Guide
Understanding Marginal Costs
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Increasing production by one unit will always lead to a rise in marginal costs, regardless of the type of costs involved.

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Answer

Marginal cost is the extra cost of producing one more unit of a good or service. When production increases, it doesn't always mean that marginal costs will rise; they can actually fall at first due to efficiencies such as better use of resources. However, as production continues to increase, we may face limitations like needing more workers or materials, which can raise costs. For example, if a bakery produces 10 loaves of bread, it might spend less on ingredients per loaf, but if it tries to produce 100 loaves, it may need to hire more staff and rent more space, increasing costs. So, while increasing production can raise marginal costs, it depends on the situation and scale of production.

Detailed Explanation

Marginal costs can change based on how much you produce. Other options are incorrect because This idea suggests that costs always go up with more production.

Key Concepts

Marginal Costs
Variable Costs
Fixed Costs
Topic

Understanding Marginal Costs

Difficulty

medium level question

Cognitive Level

understand

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