Asked by Story Kremin on May 14, 2024
Verified
Because of higher gasoline prices, firms using gasoline intensively in the production or distribution of their goods have experienced
A) an upward shift in their MC, AVC, and ATC curves.
B) an upward shift in their AFC, AVC, and ATC curves.
C) a downward shift in their MC, AFC, and AVC curves.
D) greater economies of scale.
MC Curves
also known as Marginal Cost Curves, represent the additional cost incurred in producing one more unit of a good or service.
AVC Curves
The Average Variable Cost curve shows how the average variable cost of production changes as the output level changes.
Gasoline Prices
The cost per unit of gasoline, influenced by factors like crude oil prices, refining costs, taxes, and demand.
- Determine the variables that contribute to the alterations or adjustments in cost curves in both short-run and long-run contexts.
- Gain insight into the role of external variables, specifically gasoline prices, in determining production costs and organizational responses.
Verified Answer
RM
Roxanne MojicaMay 16, 2024
Final Answer :
A
Explanation :
Higher gasoline prices increase the variable costs for firms that use gasoline intensively, leading to an upward shift in their Marginal Cost (MC), Average Variable Cost (AVC), and Average Total Cost (ATC) curves. Fixed costs (AFC) are not affected by changes in variable input prices.
Learning Objectives
- Determine the variables that contribute to the alterations or adjustments in cost curves in both short-run and long-run contexts.
- Gain insight into the role of external variables, specifically gasoline prices, in determining production costs and organizational responses.