Question

The U shape of the average total cost curve arises because of spreading total​ _______ cost over a larger output and eventually ​ _______ returns.

Answer 1

1-Fixed

2-Diminishing

Explanation-

The Averge Total Cost is the sum total of Average Fixed Cost and Average Variable Cost.In the starting stages of production the AFC is very high as it is spread over very few units,as output increases the average Fixed Cost is spread over more units due to which the AC curve falls.After a while Average Variable Cost increase and becomes dominant factor due to which the AC curves begins to rise.All these provides U shaped to the ATC curve.