While studying the relationship between total cost and marginal cost , few things are observed.
When the rate of increase in total costs starts rising , the marginal cost _______
Answer & explanation
Correct answer: option 2
The correct answer is option 2: increases
Marginal cost (MC) is the additional cost incurred for producing one more unit of output. It is derived from the total cost (TC) function. If the rate of increase in total cost rises, it means that the cost of producing additional units is increasing at an increasing rate. This directly implies that marginal cost is increasing.