Asked by Christopher Robin on Jun 22, 2024
Verified
The prices of raw materials increase in a purely competitive industry. This change will result in a(n)
A) decrease (downward shift) in the average total cost curve for firms in the industry.
B) decrease (downward shift) in the marginal revenue curve for firms in the industry.
C) increase (upward shift) in the marginal cost curve for firms in the industry.
D) increase (rightward shift) in the short-run supply curve for firms in the industry.
Marginal Cost Curve
A graphical representation showing how the cost of producing one additional unit of a good varies as production volume changes.
Raw Materials
The basic materials from which products are manufactured or made.
Average Total Cost
The total cost of production divided by the quantity produced, encompassing both fixed and variable costs to provide a per-unit cost basis.
- Analyze how advancements in technology and variations in the cost of inputs influence the supply curves of both the market and individual companies.
Verified Answer
SW
Satnam WaheguruJun 23, 2024
Final Answer :
C
Explanation :
An increase in the prices of raw materials will increase the costs of production for firms, leading to an upward shift in the marginal cost curve. This is because the marginal cost curve reflects the cost of producing one more unit of a good, and if raw materials are more expensive, then the cost of producing additional units will also increase.
Learning Objectives
- Analyze how advancements in technology and variations in the cost of inputs influence the supply curves of both the market and individual companies.