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. causes average total costs to rise at a decreasing rate as output increases. c. explains why the average total cost, average fixed cost, and the marginal cost curves are U-shaped in the short run. d. causes the difference between average total cost and average variable cost to get smaller as output increases.
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The law of diminishing marginal returns does explain why the average total cost and marginal cost curves are U-shaped in the short run. Initially, as more units of a variable input (like labor) are added to a fixed input (like capital), the marginal product of the Show more…
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