Friede-Gard Lecture 02: Falling Marginal Cost is the empirical rule

One of the many signs of the disconnect between Neoclassical economics and the real world is the theory of supply and demand, which has rising marginal cost meeting falling marginal revenue to determine both quantity and price. 

A century's worth of empirical research has shown that real-world firms have constant or falling marginal cost--not the rising marginal cost fantasy of textbooks--because, thank god, factories are designed by engineers rather than by economists.