The Law of Diminishing Marginal Returns

question 188

Multiple Choice

The law of diminishing marginal returns

• A) explains why the average total cost and marginal cost curves are U-shaped in the short run.
• B) explains why the average total cost, average fixed cost and the marginal cost curves are U-shaped in the short run.
• C) causes average total costs to rise at a decreasing rate as output increases.
• D) causes the difference between average total cost and average variable cost to get smaller as output increases.

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Definitions:

Behavioural Responses

The observable reactions or actions of an organism in response to external or internal stimuli.

Vacillation

The state of being unable to make a choice among various viewpoints or courses of action; hesitation.

Objective Appraisals

The evaluation of something based on unbiased facts and observations, rather than personal feelings or opinions.

Stressful Events

Situations or occurrences that cause tension, anxiety, or strain.