Asked by
Halei Nesbitt
on Dec 11, 2024Verified
The law of diminishing returns
A) explains why marginal cost eventually increases as output expands.
B) implies that average fixed cost will remain unchanged as output expands.
C) is true for physical production activities but not for activities such as studying.
D) applies to a capitalist economy but would be irrelevant if the means of production were owned by the state.
Law of Diminishing Returns
An economic principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.
Marginal Cost
The financial outlay for making one extra unit of a product or service.
Capitalist Economy
An economic system where private individuals or businesses own capital goods, and the production of goods and services is based on supply and demand.
- Comprehend the law of diminishing returns and its implications on production and cost.
Verified Answer
MM
Learning Objectives
- Comprehend the law of diminishing returns and its implications on production and cost.