The larger the output, the greater the amount of variable input required to produce additional units.Called the ________ effect, this leads to a _.
A)spreading; lower average fixed cost.
B)spreading; higher average fixed cost.
C)diminishing returns; lower average variable cost.
D)diminishing returns; higher average variable cost.

Question

Quizplus · Accepted Answer

The statement describes the law of diminishing returns, which states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease, leading to higher average variable cost.

The Larger the Output, the Greater the Amount of Variable