Is marginal cost similar to average variable cost in that they are both subject to diminishing returns?

Pohnpei397 Teacher Community / Jr. College Editor Emeritus Expert $(document). Ready(function() { $('a. Toggle_expert_titles').

Click(function() { $('#show_expert_titles').toggle(); return false; }); }); Best answer as selected by question asker. Yes. Both marginal cost and average variable cost are both subject to diminishing returns.

This makes sense because, after all, the marginal cost is very closely related to the average variable cost so they will move in the same directions. Marginal cost is the cost of the next product to be made. All of marginal cost consists of variable costs -- fixed costs are never part of marginal costs.

So, if marginal cost is made up entirely of variable costs, then MC and AVC must move in the same direction. Sources: http://www.amosweb.com/cgi-bin/awb_nav.pl?s=gls&c=dsp&k=m... more.

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