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What Is the Graphical Effect of a Decrease in the Prices

Question 113

Multiple Choice

What is the graphical effect of a decrease in the prices of factor inputs such as labour and materials?


A) The SRAC curve would shift down and the LRAC curve would shift up.
B) The SRAC curve would shift up and the LRAC curve would shift down.
C) Both the SRAC curve and the LRAC curve would shift up.
D) Both the SRAC curve and the LRAC curve would shift down.

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