Which of the following statements is true?
A)At a high level of output, AFC is zero.
B)If the law of diminishing marginal returns did not exist, then the marginal cost curve would not have an upward-sloping portion.
C)The marginal cost curve cuts the average fixed cost curve at its minimum.
D)There are no fixed costs in the short run.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more and more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. This means that producing additional units of output will require more and more of the variable input, causing the marginal cost to increase. Therefore, if the law of diminishing marginal returns did not exist, the marginal cost curve would be flat or downward-sloping, rather than having an upward-sloping portion. The other statement choices are incorrect.

Which of the Following Statements Is True