A new fertilizer has been discovered that significantly increases the corn crop yield per acre. As a result, the farmers':
A) average total cost curves become downward-sloping.
B) long-run average total cost curve becomes flatter.
C) average total cost curve shifts downward.
D) cost curves do not change their shape or position.

Question

Quizplus · Accepted Answer

The new fertilizer increases crop yield, which means farmers can produce more corn with the same resources, effectively reducing the average total cost per unit of output, thus shifting the average total cost curve downward.

A New Fertilizer Has Been Discovered That Significantly Increases the Corn