When the average physical product is falling
A) average variable costs are rising.
B) average fixed costs are rising.
C) total costs are falling.
D) average variable costs are falling.

Question

Quizplus · Accepted Answer

When the average physical product is falling, it means that each additional unit of input is producing less output. As a result, the costs to produce each unit are increasing, particularly the variable costs associated with labor and materials. This leads to a rise in average variable costs.

When the Average Physical Product Is Falling