Which of the following explanations gives the correct cause-and-effect sequence for production in the short run?

Question

Quizplus · Accepted Answer

The Law of Diminishing Returns explains how, as more units of a variable input (like labor) are added to a fixed input (like machinery), the additional output produced by each new unit of input eventually decreases. This principle directly affects marginal cost, which is the cost of producing one more unit of a good. As marginal cost changes due to the Law of Diminishing Returns, it influences both the average variable cost (the variable cost per unit) and the average total cost (the total cost per unit), since both of these measures include marginal costs in their calculations.

Which of the Following Explanations Gives the Correct Cause-And-Effect Sequence