A rise in the price of a fixed input shifts a firm's
A)average variable cost curve upward.
B)average total cost curve upward.
C)average total cost curve downward.
D)marginal cost curve upward.
E)marginal cost curve downward.

Question

Quizplus · Accepted Answer

An increase in the price of a fixed input, such as rent or equipment, would shift a firm's average total cost curve upward. This is because fixed costs are a portion of total costs, so an increase in the price of a fixed input would increase the firm's total costs and thus increase its average total costs. It would not affect the marginal cost curve, as that is based on the variable costs of producing each additional unit of output.

A Rise in the Price of a Fixed Input Shifts