During the 1970s,oil prices reached historical highs,causing many competitive industries to reduce the supply of goods and services.Which of the following is the most likely explanation for this reduction in supply?
A)The total fixed cost of the firms would have increased due to the higher price of oil.
B)The marginal cost curves of the firms most likely shifted upward.
C)The supply curves of firms may have shifted downward.
D)The average total cost of these firms mostly likely shifted downward due to the high inflation.

Question

Quizplus · Accepted Answer

The marginal cost curves of the firms most likely shifted upward because the higher price of oil increased the cost of production for many industries, making it more expensive to produce each additional unit of goods or services.

During the 1970s,oil Prices Reached Historical Highs,causing Many Competitive Industries