Asked by Lauren Stacy on Jul 12, 2024

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In the short run,as output gets larger:

A) fixed cost gets smaller.
B) the average variable cost curve gets closer to the average total cost curve.
C) marginal cost gets smaller.
D) average total cost decreases after the point of diminishing returns.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the average cost of production excluding fixed costs.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, representing the cost per unit of output including both fixed and variable costs.

  • Ascertain the contexts in which average variable and total costs grow or decline.
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Verified Answer

DF
Delvin FourcandJul 17, 2024
Final Answer :
B
Explanation :
In the short run, as output gets larger, the average variable cost curve gets closer to the average total cost curve. This is because fixed costs remain the same in the short run, and as output increases, the fixed cost is spread over more units of output, reducing the average fixed cost. However, the variable costs increase with the increase in output, causing the average variable cost to initially decrease and then start increasing at a higher rate. As a result, the average total cost initially decreases and then starts increasing at a higher rate due to the increasing average variable cost. Therefore, as output gets larger, the average variable cost curve gets closer to the average total cost curve.