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Diminishing Returns Effect
A principle in economics where increasing one factor of production, while keeping others constant, will at some point yield lower per-unit returns.
Variable Cost
Expenses that vary directly with the level of production output, such as raw materials, labor, and energy costs.
Output
The total amount of goods or services produced by a company, sector, or economy within a specific time period.
Average Total Cost
The total cost of production (fixed plus variable costs) divided by the number of units produced.
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