Question

Is it true that in a short-run production process, the marginal cost curve eventually slopes upward because firms have to pay workers a higher wage rate as they produce more output? Explain your answer.

Answer 1

Yes, This is True.

Step-by-step explanation:

Marginal cost is the cost of one additional unit. The marginal cost curve will slope upwards because firm will pay more wage to the worker who produce more output. This can be regarded as the increase in output leads to increased wage rate. The marginal cost curve will be upward sloping because there will be addition to the marginal cost due to increase in one unit of output.