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.

Question

Quizplus · Accepted Answer

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.

The Law of Diminishing Marginal Returns Results in Average Total