The larger the quantity, the more of the variable input is needed to produce additional units of quantity. Called the _____ effect, this leads to _____ variable costs as quantity rises.
A)spreading; lower
B)spreading; higher
C)diminishing marginal product; lower
D)diminishing marginal product; higher

Question

Quizplus · Accepted Answer

This is referring to the law of diminishing marginal product, which states that as more of a variable input is added to a fixed input, the marginal product of the variable input will eventually decrease. As a result, more of the variable input is needed to produce additional units of output, leading to higher variable costs as quantity rises.

The Larger the Quantity, the More of the Variable Input