Answer :
That there is direct relationship between price and quantity. Marginal cost is the cost of producing an additional unit of a good or service. Generally, marginal cost rises on each successive unit produced. A producer is willing to increase production only if he or she receives a higher price for the additional units produced. If price falls, the cost of producing the good will be more than the price the seller receives, and he or she will cut back production.
The law of growing marginal costs states that, in the short run, marginal costs rise as more and more of something is used.
A rise in marginal cost will eventually lead to an increase in average total cost.
About Marginal cost:
- The marginal cost of supplying an additional unit of output is proportional to labor's marginal productivity.
- According to the law of diminishing returns, marginal cost rises as output rises.
- The marginal cost is the increase or decrease in the cost of manufacturing one more item or serving one more customer. It is also known as additional expense.
- Marginal costs are based on variable or direct production expenses – such as labor, materials, and equipment – rather than fixed costs that the company would incur whether it boosts production or not.
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