D) At each level of output, MC is equal to difference between AVC and ATC. 26) Diminishing marginal returns occur when: 26) A) units of a variable input are added to a fixed input and marginal product falls. B) the size of the plant is increased in the long run. C) units of a variable input are added to a fixed input and total product falls. D) the quantity of the fixed input is increased and returns to the variable input fall. 27) Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The