An increase in variable costs:

Question

Quizplus · Accepted Answer

An increase in variable costs will result in the firm's marginal, average total, and average variable cost curves shifting upward by the amount of the cost increase. This is because variable costs directly affect the production costs of the firm, and therefore, an increase in variable costs will lead to an increase in the cost of producing each unit of output, resulting in an upward shift of the cost curves. Option A is incorrect because the shift in the cost curves will be equal to the increase in variable costs. Option C and D are also incorrect as an increase in variable costs will have a direct impact on the supply curve of the industry, resulting in an upward shift (to the left) of the industry supply curve, but the extent of this shift cannot be determined based on the information given.

An Increase in Variable Costs