The law of diminishing marginal returns
A. causes average fixed costs to decline continuously as output increases.
B. causes the difference between average total cost and average variable cost to shrink as output increases.
C. results in MC but not ATC curves eventually increasing at an increasing rate.
D. results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate.
Answer: D
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In the income-expenditure model, if autonomous investment decreases by $10 billion, _____
a. the aggregate expenditure line shifts upward by $10 billion b. planned saving increases by $10 billion c. the aggregate expenditure line shifts downward by $10 billion d. planned saving decreases by $10 billion e. the equilibrium level of real GDP demanded increases by $10 billion
Refer to the diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data suggest that:
A. West Lothian should specialize in, and export, beer.
B. both countries will be better off if they do not engage in specialization and trade involving
these two products.
C. West Lothian should specialize in, and export, pizza.
D. East Lothian should specialize in, and export, beer.