Short-run variable costs behave as they do because of the Law of Diminishing Returns.

Question

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The Law of Diminishing Returns explains that as more units of a variable input (like labor) are added to a fixed input (like machinery), beyond a certain point, the additional output produced by each additional unit of the variable input will start to decrease, leading to an increase in short-run variable costs per unit of output.

Short-Run Variable Costs Behave as They Do Because of the Law