A decrease in the price of inputs used to produce flat -panel televisions causes
A) a movement downwards along a given average cost curve only.
B) the marginal cost curve to shift downwards but not the average cost curve.
C) the average cost curve to shift downwards but not the marginal cost curve.
D) the average cost curve and the marginal cost curve to shift downwards.

Question

Quizplus · Accepted Answer

A decrease in the price of inputs lowers both the marginal cost and the average cost of producing flat-panel televisions, causing both curves to shift downwards. This is because both types of costs are directly affected by the cost of inputs.

A Decrease in the Price of Inputs Used to Produce