8. Resource costs increase in a purely competitive industry. This change will result in a(n):
A. Increase in average fixed cost for a firm in the industry
B. Decrease in average variable cost for a firm in the industry
C. Decrease in the marginal cost curve for a firm in the industry
D. Decrease in the short-run supply curve for a firm in the industry

Question

BlackTom AI · Accepted Answer

Here is the question restated along with each answer option so you can see what is being evaluated.
Question: 8. Resource costs increase in a purely competitive industry. This change will result in a(n):
A. Increase in average fixed cost for a firm in the industry
B. Decrease in average variable cost for a firm in the industry
C. Decrease in the marginal cost curve for a firm in the industry
D. Decrease in the short-run supply curve for a firm in the industry

Option A: Increase in average fixed cost for a firm in the industry
Think about what happens to fixed costs when resource costs rise. Resource costs typically affect variable inputs and total variable cost rather than fixed costs, which are sunk or constant in the short run. Since fixed costs do not vary with output, an increase in resource costs does not imply an increase in average fixed cost. Therefore, this statement misattributes the source of the cost change and is not correct.

Option B: Decrease in average variable cost for a firm in the industry
If resource costs rise, the input prices for producing each unit go up, not down. Average variable cost is the variable cost per unit of output, and when input prices rise, AV C tends to rise as well (or at least not fall). Hence, this option incorrectly describes the direction of change in AVC and is not correct.

Option C: Decrease in the marginal cost curve for a firm in the industry
An increase in resource costs raises the cost of producing each additional unit, all else equal. That pushes the marginal cost curve upward rather than downward. A decreasing MC would imply cheaper production per unit, which contradicts the given scenario of higher resource costs. So this option is incorrect.

Option D: Decrease in the short-run supply curve for a firm in the industry
In perfect competition, a firm's short-run supply is the portion of its marginal cost curve that lies above average variable cost. When resource costs rise, the marginal cost of producing each additional unit typically increases, causing the firm to supply less at any given price. This reduces the quantity supplied and effectively shifts the firm's short-run supply curve to the left (a decrease in supply). This matches the intuitive outcome of higher input prices: firms cut back on output in the short run. Therefore, this option correctly describes the impact.

类似问题

Which of the following segments of the marginal cost curve lies entirely on the firm’s short-run supply curve?

As a result of inflation impacting consumer goods more quickly than inputs, what happens to short run production as inflation increases?

In the market short run,

The short-run supply curve for a firm in a perfectly competitive market is

The short-run supply curve for a firm in a perfectly competitive market is

The perfectly competitive firm’s short-run supply curve is the

A firm’s willingness to supply its product in the short run is represented on a graph by the

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单