The law of diminishing marginal returns
A)explains why the average total cost and marginal cost curves are U-shaped in the short run.
B)explains why the average total cost, average fixed cost, and the marginal cost curves are U-shaped in the short run.
C)causes average total cost to rise at a decreasing rate as output increases.
D)causes the difference between average total cost and average variable cost to get smaller as output increases.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns explains why marginal cost initially decreases and then increases, leading to a U-shaped marginal cost curve, which in turn affects the average total cost curve in the short run.

The Law of Diminishing Marginal Returns