In the short run, a firm employs labor and capital to produce gadgets. If the annual price of capital increases, what will happen to the short-run cost curves?

In the short run, a firm employs labor and capital to produce gadgets. If the annual price of capital increases, what will happen to the short-run cost curves? Correct Answer The average fixed cost and average total cost curves will shift upward.

B-An increase in the price of capital is an increase in total fixed costs. This increases AFC. Since ATC = AFC + AVC, it also increases ATC. Because fixed costs do not change with output, marginal cost and variable cost remain the same.
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Related Questions

Indifference curves relating to supply of labour have a number of properties some of which are mentioned below
1. Indifference curves are downward slopping
2. Indifference curves are upward slopping
3. Higher indifference curves indicate lower levels of utility
4. Higher indifference curves indicate higher levels of utility
5. Indifference curves do not intersect
6. Indifference curves intersect
7. Indifference curves are concave to the origin
8. Indifference curves are convex to the origin
Which among the following properties are not true?
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1. Long run average cost curve under normal production function
2. Long run average cost curve under linearly homogeneous production function
3. Planning curve
4. Envelope curve
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Short-run demand and total cost functions for a monopoly firm are as under:
Demand function : Q = 100 - 0.2 P
Price function : P = 500 - 5 Q
Cost function : TC = 50 + 20 Q + Q2Where Q = Total quantity of the product in physical units.
P = Price of the product per unit
TC = Total cost
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As a salesperson, Poly can choose one of two methods of annual payment either an annual salary of Tk. 35,000 with no commission or an annual salary of Tk. 10,000 plus a 20 percent commission on her total annual sales. What must her total annual sales be to give her the same annual pay with either method?
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1. long period equilibrium for a firm under monopoly
2. short period equilibrium for a firm under oligopoly
3. long period equilibrium
4. long period equilibrium for a firm under perfect competitions
Select the correct answer
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2. Short-period equilibrium for a firm under oligopoly.
3. Long-period equilibrium
4. Long-period equilibrium for a firm under perfect competition.
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