A Decrease in the Price of a Fixed Factor of Production

question 486

Multiple Choice

A decrease in the price of a fixed factor of production decreases total cost and

• A) increases marginal cost.
• B) leaves marginal cost unchanged.
• C) decreases marginal cost.
• D) increases variable cost.

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Definitions:

Clear Preferences

The concept in decision theory and economics where consumers or decision-makers have well-defined preferences, allowing for consistent choices among sets of alternatives.

Budget Constraints

Constraints that consumers face as a result of limited incomes.

Endowment Effect

Tendency of individuals to value an item more when they own it than when they do not.

Reference Point

A basis or standard for evaluation, comparison, or judgment.