The average variable cost curve slopes upward with a higher rate of output in the short run because of
A)The effect of diminishing returns.
B)The shape of the average fixed cost curve.
C)Diseconomies of scale.
D)Implicit but not explicit costs.

Question

Quizplus · Accepted Answer

The average variable cost curve slopes upward with a higher rate of output in the short run because of the effect of diminishing returns. As output increases, the marginal cost of producing each additional unit typically increases due to diminishing returns to the variable input (e.g. labor). This increase in marginal cost leads to an upward slope of the average variable cost curve.

The Average Variable Cost Curve Slopes Upward with a Higher