As a firm continues to produce additional output, which of the following will continue to decline as output expands?
A) average total costs
B) marginal costs
C) average fixed costs
D) opportunity costs

Question

Quizplus · Accepted Answer

As output expands, fixed costs are spread over a larger quantity of output, which causes average fixed costs to decline. However, average total costs initially decline and then increase due to the law of diminishing returns. Marginal costs may initially decline due to economies of scale but eventually increase as output expands. Opportunity costs may or may not decline as output expands, depending on the specific situation.

As a Firm Continues to Produce Additional Output, Which of the Following