Multiple Choice

If a firm experiences constant returns to the variable input in the short run:
A) marginal cost will be greater than average variable cost, but the two will become more equal as output increases.
B) marginal cost will be less than average variable cost, but the two will become more equal as output increases.
C) marginal cost will be greater than average variable cost, and the difference between the two will become larger as output increases.
D) marginal cost and average variable cost will be equal over the range of output in question.
Correct Answer:
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