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    Microeconomics Study Set 44
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    Exam 11: Behind the Supply Curve: Inputs and Costs
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    A Firm Employs Capital as a Fixed Input and Labor
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A Firm Employs Capital as a Fixed Input and Labor

Question 189

Question 189

Essay

A firm employs capital as a fixed input and labor as a variable input in the short run. If the cost of capital falls, what will happen to the AVC, ATC, and MC curves? Explain.

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Because ATC = AVC + AFC, the A...

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