Refer to Figure 8-1. If the firm purchases a new machinery which produces fewer
ID: 1234214 • Letter: R
Question
Refer to Figure 8-1. If the firm purchases a new machinery which produces fewer defective units of output using the same variable inputs as before, which of the following changes will be observed? (Assume that consumers suffer losses from defective units that they cannot otherwise recover.) The figure given below represents a firm in a market characterized by many buyers and one seller. MC represents the initial marginal cost, MR the initial marginal revenue, and D the initial demand curve of the firm in equilibrium. Further, MC', D', and MR' represents the revised marginal cost, demand, and marginal revenue respectively after the firm adopts the strategy discussed below. Figure 8-1
Figure 8-1
Which Answer:
The marginal cost curve will shift upward from MC to MCExplanation / Answer
The marginal cost and demand curve will shift upward to MC
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