When the production of a good involves several inputs,an increase in the cost of one input will usually cause total costs to
A) rise more than in proportion.
B) rise less than in proportion.
C) remain unchanged.
D) rise by the exact amount of the input price increase.

Question

Quizplus · Accepted Answer

If the cost of one input increases, the firm may be able to substitute it with a cheaper input to minimize the effect on the total cost. In this case, the increase in one input cost will not cause total costs to rise in proportion. Therefore, option B is correct.

When the Production of a Good Involves Several Inputs,an Increase