Question

when a firm is experiencing decreasing marginal costs, it could be because​ a. ​the average costs are increasing b. ​the firm is going down its learning curve c. ​the firm’s marginal productivity is increasing d. ​both c and d

Answer 1

B as well as C. This is due to the fact that as a company's production and learning curve rise, the cost of the subsequent unit of output falls, making it advantageous for the company to produce more.

What is Marginal cost?

• In managerial accounting, the idea of marginal cost is crucial because it may be used to maximise production through economies of scale within an organisation.
• By producing at the point where marginal cost (MC) equals marginal revenue, a business can optimise its earnings (MR).
• Because fixed costs are fixed regardless of output levels, larger production spreads the total fixed cost over more units, resulting in a lower fixed cost per unit.
• Producing more units will result in higher variable costs because variable costs are based on production levels.
• In economics, the marginal cost is the difference in total production costs caused by making or producing one extra unit.
• Divide the variation in production costs by the variation in quantity to determine marginal cost .

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