Figure 8.5.2
-Higher input prices result in:
A) upward shifts of MC and reductions in output.
B) upward shifts of MC and increases in output.
C) downward shifts of MC and reductions in output.
D) downward shifts of MC and increases in output.
E) increased demand for the good the input is used for.

Question

Figure 8.5.2
-Higher input prices result in:
A) upward shifts of MC and reductions in output. 
B) upward shifts of MC and increases in output. 
C) downward shifts of MC and reductions in output. 
D) downward shifts of MC and increases in output. 
E) increased demand for the good the input is used for.

Quizplus · Accepted Answer

Higher input prices increase the costs of production, which results in upward shifts of the marginal cost (MC) curve. As a result, firms reduce their output to maintain their profit margins. Therefore, higher input prices result in upward shifts of MC and reductions in output.

Figure 8.5.2 -Higher Input Prices Result In