Which of the following statements is correct Diminishing ret

Which of the following statements is correct? Diminishing returns can be avoided by increasing the use of variable factors of production. Diminishing returns will cause marginal cost to rise O If marginal cost is rising, average cost must also be rising. None of the above are correct

Solution

The second statement is correct i.e. diminishing returns will cause the marginal cost to rise. This follows only if the law of diminishing returns holds. Hence the correct answer is (B).