Explain the Difference Between Diminishing Marginal Returns to Factor and a Decreasing-Cost

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The Answer is The upward slope of the short-run industry supply curve (the portion of the marginal cost curve above the average variable cost curve)is due to diminishing marginal returns.Diminishing marginal returns operates in the short-run when one input is fixed.It implies that as the employment of an input is increased,the additional output that is produced with the help of the additional input decreases.
A decreasing-cost industry is one where the long-run supply curve is downward sloping.This means that output expands at a lower cost.Lower cost is due to the fall in input prices as more is demanded.

Explain the Difference Between Diminishing Marginal Returns to Factor and a Decreasing-Cost

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Explain the Difference Between Diminishing Marginal Returns to Factor and a Decreasing-Cost

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Correct Answer:VerifiedShow Answer

Correct Answer:
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