The larger the output,the more variable input required to produce additional units.Called the _____ effect,this leads to a _____ average _____ cost as output rises.

A) spreading;lower;fixed
B) spreading;higher;fixed
C) diminishing returns;lower;variable
D) diminishing returns;higher;variable

The statement describes the Law of Diminishing Returns, which states that as output increases, the marginal product of variable inputs will eventually decrease, leading to the need for more variable inputs to produce additional units. This leads to higher average variable costs and makes D the correct answer. A is incorrect because it suggests that larger output leads to lower average fixed costs, which is not true. B is incorrect because it contradicts the statement by suggesting that larger output leads to lower average variable costs. C is partially correct in identifying the Law of Diminishing Returns, but it is incorrect in suggesting that it leads to lower variable costs as output rises.