The prices of raw materials increase in a purely competitive industry. This change will result in a (n) A. decrease (downward shift) in the average total cost curve for firms in the industry. B. decrease (downward shift) in the marginal revenue curve for firms in the industry. C. increase (upward shift) in the marginal cost curve for firms in the industry. D. increase (rightward shift) in the short-run supply curve for firms in the industry.

Question

Business

Myah Nash

30 November, 21:14

The prices of raw materials increase in a purely competitive industry. This change will result in a (n) A. decrease (downward shift) in the average total cost curve for firms in the industry. B. decrease (downward shift) in the marginal revenue curve for firms in the industry. C. increase (upward shift) in the marginal cost curve for firms in the industry. D. increase (rightward shift) in the short-run supply curve for firms in the industry.

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Answers (1)

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Kristopher Hayden · Answer 1

The answer is C. increase (upward shift) in the marginal cost curve for firms in the industry

Explanation:

Marginal cost is the the cost incurred by producing additional unit of a product. Marginal costs are usually variable cost. When marginal cost has been incurred, there will be a change in the total cost.

When the price of raw material (variable cost, input) increases, this increase the cost of production and there will also be an increase in the marginal cost curve for firms in the industry.

Because it is an increase, the curve shifts upward