Asked by Anthony Amaya on Jun 29, 2024
Verified
The law of diminishing returns explains why short-run marginal cost curves are upsloping.
Law of Diminishing Returns
A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.
Marginal Cost Curves
Graphs that show how the cost of producing one additional unit changes as the production volume increases.
- Acquire knowledge on how total, marginal, and average products contribute to the efficiency of production.
- Understand the contexts in which applying inputs to production processes leads to lower returns.
Verified Answer
MC
Maryame ChayatJul 06, 2024
Final Answer :
True
Explanation :
The law of diminishing returns states that as more of a variable input (like labor) is added to a fixed input (like capital or land), the additional output produced from each new unit of the variable input will eventually decrease. This principle leads to an increase in the marginal cost of production as more units are produced, which is why short-run marginal cost curves are typically upsloping.
Learning Objectives
- Acquire knowledge on how total, marginal, and average products contribute to the efficiency of production.
- Understand the contexts in which applying inputs to production processes leads to lower returns.