How would a $10 increase in an input price effect a price-taking firm's supply curve?
A) MC would increase by $10 and AC would decrease by $10
B) AC would increase by $10 and MC would decrease by $10
C) MC and AC would both decrease by $10
D) MC and AC would both increase by $10

Question

Quizplus · Accepted Answer

An increase in an input price would increase both the marginal cost (MC) and average cost (AC) of production for a firm, as it becomes more expensive to produce each additional unit of output and the overall cost of production increases.

How Would a $10 Increase in an Input Price Effect