Microeconomics: Principles, Applications, and Tools (8th Edition)

by O'Sullivan, Arthur; Sheffrin, Steven; Perez, Stephen

Published by Prentice Hall

ISBN 10: 0-13294-886-9

ISBN 13: 978-0-13294-886-9

Chapter 8 - Production Technology and Cost - Exercises - 8.2 A Firm with a Fixed Production Facility: Short-Run Costs - Page 203: 2.2

Answer

decreasing returns spreading of fixed cost

Work Step by Step

As a firm continues to grow by increasing output, the average variable cost increases because of diminishing returns.

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