Question

Explain how the following event would affect the cost curves A company's primary supplier of resources implements a 3 percent price increase for all of its supplies. O A. O B. ° C. Marginal cost, average variable cost, and average total cost will increase. Average fixed cost will not change. Marginal cost, average variable cost, and average total cost will decrease. Average fixed cost will not change. Marginal cost, average variable cost, and average fixed cost will increase. Average total cost will not change. D. Marginal cost, average variable cost, and average total cost will increase. Average fixed cost will decrease.

Answer 1

Marginal cost, average variable cost, and average total cost will increase. Average fixed cost will not change.

Step-by-step explanation:

Marginal Cost is the change in total cost as a result of producing one extra unit of output.

Variable cost is cost that varies with output level. Average variable cost = variable cost / quantity produced

Fixed cost is cost that doesn't vary with the level of output produced. Average fixed cost = Fixed cost / quantity produced.

Total cost is the sum of fixed and variable cost. average total cost is total cost / quantity produced.

If the price of supplies increase, the cost of production increases and average total cost, average variable cost and marginal cost would increase.

Fixed cost would remain the same.

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