Final answer:
The statement is false as higher costs of production, including increased resource prices, result in a higher ATC and cause the long-run ATC curve to shift upward. This also leads to a leftward shift of the supply curve, indicating a reduced quantity supplied at each price.
Step-by-step explanation:
The statement that higher resource prices create lower Average Total Cost (ATC) and cause an upward shift of the long-run ATC curve is false. In economic terms, when a firm faces higher costs of production, such as increased resource prices, this results in a higher ATC, which is the total cost per unit of output. Consequently, the long-run ATC curve will shift upward, reflecting these higher costs across all levels of production.
As the costs of production rise, firms earn lower profits at any given selling price for their products. This negatively impacts the firm’s profitability and can also affect the quantity of goods supplied at given prices. Thus, these higher production costs cause the supply curve to shift to the left, which indicates that at each price, the firm is willing to supply a smaller quantity of goods. This is a direct relationship: as the cost of production increases, the supply decreases, assuming the selling price remains constant.