AP Microeconomics Unit 3 Practice Test

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With capital fixed at one unit with 1, 2, 3 units of labor added in equal successive units, production of the output increases from 300 (1 unit of labor) to 350 (2 units of labor) to 375 (3 units of labor). Which of the following is a correct interpretation?

This is short-run diminishing marginal returns. average fixed costs. greater than average total cost. MC intersects AVC and ATC at their minimum points.

Correct Answer:

This is short-run diminishing marginal returns.

Explanation:

Correct answer: This is short-run diminishing marginal returns.

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