Which of the following statements is true?
A)The marginal cost curve has an upward-sloping portion to it because of the law of diminishing marginal returns.
B)The marginal cost curve cuts the ATC curve at its highest point.
C)When marginal cost is rising, so must average total cost be rising.
D)A decline in marginal cost causes the MPP (of the variable input)to decline.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as additional inputs are added to a fixed input, the marginal product of the variable input will eventually decrease, causing the marginal cost to increase. Therefore, the marginal cost curve has an upward-sloping portion to it.

B) is incorrect because the marginal cost curve cuts the AVC curve at its lowest point. 
C) is incorrect because marginal cost and average total cost do not always move in the same direction. 
D) is incorrect because a decline in marginal cost would increase the MPP (of the variable input) as it would mean that the additional output obtained from each additional unit of input is increasing.

Which of the Following Statements Is True