Asked by Willis Sands on Jun 01, 2024
Verified
The law of diminishing marginal returns results in average total cost eventually
A) increasing at a decreasing rate
B) decreasing at a decreasing rate.
C) decreasing at an increasing rate.
D) increasing at an increasing rate.
Average Total Cost
The total cost to produce a given quantity of output divided by the quantity of output produced; it includes all opportunity costs.
Diminishing Marginal Returns
Refers to a point in production where adding an additional factor of production results in a smaller increase in output.
- Ascertain the progression stages of production, incorporating increasing returns, diminishing returns, and negative returns, within the framework of the law of diminishing marginal returns.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
D
Explanation :
The law of diminishing marginal returns implies that as more units of a variable input are added to fixed inputs, the additional output from each new unit of input will eventually decrease. This leads to higher costs for each additional unit produced, causing average total costs to increase at an increasing rate.
Learning Objectives
- Ascertain the progression stages of production, incorporating increasing returns, diminishing returns, and negative returns, within the framework of the law of diminishing marginal returns.