Other things equal, if the prices of a firm's variable inputs were to fall,
A)one could not predict how unit costs of production would be affected.
B)marginal cost, average variable cost, and average fixed cost would all fall.
C)marginal cost, average variable cost, and average total cost would all fall.
D)average variable cost would fall, but marginal cost would be unchanged.

Question

Quizplus · Accepted Answer

Variable input costs directly affect marginal cost and average variable cost, leading to a decrease in average total cost as well. Average fixed cost remains unchanged because it does not vary with the level of output.

Other Things Equal, If the Prices of a Firm's Variable