When a firm produces a small amount of output, the spreading effect:
A)is stronger than the diminishing returns effect.
B)is weaker than the diminishing returns effect.
C)and diminishing returns effect are equal.
D)will be zero.

Question

Quizplus · Accepted Answer

When a firm produces a small amount of output, the spreading effect is stronger because fixed costs are spread over a larger number of units, reducing average total cost.

When a Firm Produces a Small Amount of Output, the Spreading