If input prices rise as industry output expands,then a perfectly competitive firm's marginal cost and average cost curves will:

Question

Quizplus · Accepted Answer

With an increase in input prices, the production costs of the firm will increase, thus leading to an upward shift of both marginal cost and average cost curves. This is because as the firm increases its output, it would require more inputs, which become costlier, leading to an increase in the costs of production. Therefore, the MC and AC curves will shift upwards, leading to an increase in the equilibrium price and a decrease in equilibrium quantity in the short run.

If Input Prices Rise as Industry Output Expands,then a Perfectly