It's not the case that marginal costs keep decreasing as firms achieve economies of scale. Once factories reach capacity, there will be diminishing returns. Let's take a bakery as an example.

To maximize profits, a company will increase production until marginal revenue equals marginal cost ... for example, the average increase per unit from 100 units to 150 units. The formula for ...

Compare marginal revenue and cost ... out as a formula: (Total Revenue - Original Revenue) / Additional Units = Marginal Revenue Per Additional Unit So, your total revenue in the example is ...

Reviewed by Andy Smith Fact checked by Yarilet Perez The total cost of a business is composed of fixed costs and variable ...

Increases to marginal opportunity cost can become smaller or larger as you produce more goods, depending on the conditions. For example, the cost of materials per unit may decrease if materials ...