A reduction in variable production costs shifts the firm's _______ and _______ curves _______ in the short run.

Question

Quizplus · Accepted Answer

A reduction in variable production costs will lower the marginal cost (MC) curve and therefore shift the average total cost (ATC) curve downward. This is because the lower variable costs will reduce the cost per unit of output, making production more efficient and decreasing the amount firms have to spend to produce each good. The shifts in these curves would lead to increased profit margins for the firm.

A Reduction in Variable Production Costs Shifts the Firm's _______