What do higher input prices result in? - ProProfs Discuss
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What do higher input prices result in?



A. Upward shifts of MC and reductions in output
B. Increased demand for the good the input is used for
C. Downward shifts of MC and reductions in output
D. Downward shifts of MC and increases in output
E. Upward shifts of MC and increases in output

This question is part of PRACTICE QUIZ CHP 8
Asked by Doper, Last updated: Nov 27, 2018

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3 Answers

K. Wilson

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K. WilsonMarketing Analyst, MBA, Miami
Marketing Analyst, MBA, Miami

Answered on Nov 27, 2018

If the production costs: materials, labour etc go up then the profit margin wil be negatively affected. This won't have an effect upon demand for the goods unless the end price is increased as result of the increased input costs. The rate of work and output speed may stay the same if there are changes in incentive for workers. Otherwise the output will lessen.

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b.Lisa

B.Lisa

Answered on Feb 26, 2018

Input costs can include materials, labor, fees, and other expenses. Output is the finished product. MC stands for marginal costs. If a company is spending more on their input costs, such as salaries or new machinery, there will be a decrease in the output profits.

Marginal cost, that is the cost of making one item, will increase as well. Many factors play into this equation and it can fluctuate due to these varying costs. If input costs are increasing, the marginal costs are directly tied to it so it would naturally increase.

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John Smith

John Smith

Answered on Mar 18, 2017

Upward shifts of MC and reductions in output
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