Question

Why would a business continue to produce additional units of an item after the marginal cost begins to rise?

Answer 1

To increase their profit.

Even if the marginal cost is going up, as long as it is less than sales price the company can still make a profit. As the marginal cost continues to rise, that profit gets smaller and smaller but still exists and gives companies motivation to continue producing.

Answer 2

To reduce overall production cost.

Step-by-step explanation:

At a certain level of production, the benefit of producing one additional unit and generating revenue from that item will bring the overall cost of producing the product line down. The key to optimizing manufacturing costs is to find that point or level as quickly as possible.