The U shape of the LAC reflects
A)law of variable proportions
B)laws of returns to scale
C)reserve capacity
D)none of these

Question

Quizplus · Accepted Answer

The U shape of the LAC reflects the law of variable proportions. As more variable inputs are added to a fixed input, the marginal product of the variable input will eventually decrease. This is because the fixed input becomes a limiting factor in the production process.

The U Shape of the LAC Reflects