An increase in the cost of an input will result in
A) a leftward shift in the firm's supply curve.
B) an upward shift of the firm's marginal cost curve.
C) a leftward shift of the market supply curve.
D) All of the above.

Question

Quizplus · Accepted Answer

An increase in the cost of an input will directly affect the firm's costs, causing an upward shift of the firm's marginal cost curve. In turn, this will affect the firm's supply curve by causing it to shift leftward. Furthermore, since all the firms in the market are affected similarly by the increase in input costs, the market supply curve will also shift leftward. Therefore, all the above options (A, B, and C) are correct.

An Increase in the Cost of an Input Will Result