Answer
Option: c. increasing, then diminishing, marginal returns.
Work Step by Step
As we increase input, it costs more. By adding additional input, the return also increases up to a point. However, due to the diminishing nature of marginal return, it starts decreasing even if we add additional input. It means that the increased amount of additional input/cost results in decreasing output.
To sum up, we know that the Marginal Cost (MC) is directly proportional to the change in cost. Hence, MC decreases initially as the increase in cost results in greater increase in output. However, due to the diminishing marginal return, MC starts increasing after a point.
