Question

The law of diminishing marginal returnsa. explains why the average total cost, average fixed cost and marginal cost curves are U-shaped in the short runb. causes average total costs to rise at a decreasing rate as output increasesc. explains why the average total cost and marginal cost curves are U-shaped in the short rund. causes the difference between average total cost and average variable cost to get smaller as output increases

Answer 1

Answer:

c) explains why the average total cost and marginal cost curves are U-shaped in the short run.

Explanation:

According to the law of diminishing returns, when one input variable is increased, the result is seen in the increase in the output. At some point in the production, when an additional factor is added, the output increases but in smaller return. One factor remains fixed in the process of diminishing return. The variable factor is increased at any point of production which do not prove much productive.