The notion that when the price of an input falls,a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as
A)the output effect.
B)the substitution effect.
C)the input effect.
D)the cost effect.

Question

Quizplus · Accepted Answer

The output effect describes how a decrease in the price of an input leads to lower production costs for a firm, resulting in an increase in output and the employment of more inputs. This is because the firm can now produce more at a lower cost, making it more profitable to increase production.

The Notion That When the Price of an Input Falls,a