5) Which one of the following statements about a firm’s cost curves is true? A.

Question

5) Which one of the following statements about a firm’s cost curves is true?
A. The average variable cost curve only includes explicit costs.
B. Increases in input prices for variable factors of production will shift the firm’s marginal cost curve up and also shift the firm’s total variable cost curve up.
C. Fixed costs only include implicit costs.
D. An increase in the price of a fixed factor of production will shift all of the firm’s cost curves up.
E. A competitive firm’s short run supply curve is always identical at all points to its short run marginal cost curve.

Explanation / Answer

B. Increases in input prices for variable factors of production will shift the firm’s marginal cost curve up and also shift the firm’s total variable cost curve up.

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