When the Prices of All Inputs Increase by a Proportionate

question 88

Multiple Choice

When the prices of all inputs increase by a proportionate amount:

• A)the firm's total cost curve will remain unchanged since the cost-minimizing combination of inputs is unchanged.
• B)the firm's total cost curve may rotate upward or may leave the long-run total cost curve unchanged.
• C)will always rotate the long-run total cost curve upward.
• D)could actually rotate the long-run total cost downward if the firm chooses to produce a lower level of output.

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Definitions:

Individual Transferable Quotas (ITQs)

Limits (quotas) set by a government or a fisheries commission on the total number or total weight of a species that an individual fisher can harvest during some particular time period; fishers can sell (transfer) the right to use all or part of their respective individual quotas to other fishers.

TAC

Total Average Cost, the sum of all production costs divided by the number of goods produced, indicating the average cost per unit of product.

Arms Race

A competition between two or more parties to have the best armed forces and military technology, often leading to increased military spending and stockpiling of weapons.

Property Rights

Legal rights to possess, use, and dispose of assets including real property (land and buildings) and intellectual property.