Increasing marginal cost describes the relationship between which two factors?

Increasing marginal cost describes the relationship between marginal cost and the quantity produced. This concept indicates that as the production of a good or service increases, the cost of producing each additional unit also tends to rise. This can occur due to various factors such as resource limitations, diminishing returns, and increased operational inefficiencies associated with scaling up production.

In practical terms, when a company tries to produce more units of a good, the cost of resources—which could be labor, materials, or time—may escalate due to scarcity or the necessity of employing less efficient methods or inputs. Therefore, as production expands, the cost of creating each additional unit rises, leading to the principle of increasing marginal costs. Understanding this relationship is crucial for businesses when determining pricing strategies and production levels.