If a firm chooses to use very little capital in production, it means that it is primarily relying on labor or other variable inputs for production. This could lead to an increase in variable costs, as the firm may need to hire more labor or purchase more of other variable inputs to maintain the same level of production. Therefore, the Average Variable Cost (AVC) would increase.

However, the decision to use less capital does not necessarily affect the firm's fixed costs, as these costs are incurred regardless of the level of production. Therefore, the Average Fixed Cost (AFC) would not increase.

The Marginal Cost (MC), which is the cost of producing one more unit of a good, could potentially increase if the firm is operating in the short run and has already used up its variable inputs. In this case, the firm would need to start using its fixed inputs (like capital), which are typically more expensive to adjust.

Therefore, the correct answer is E. MC, AVC, and ATC increase. The Average Total Cost (ATC) would increase as a result of increases in both AVC and MC.

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If a firm chooses to use very little capital in production, it means that it is primarily relying on labor or other variable inputs for production. This could lead to an increase in variable costs, as the firm may need to hire more labor or purchase more of other variable inputs to maintain the same level of production. Therefore, the Average Variable Cost (AVC) would increase.

However, the decision to use less capital does not necessarily affect the firm's fixed costs, as these costs are incurred regardless of the level of production. Therefore, the Average Fixed Cost (AFC) would not increase.

The Marginal Cost (MC), which is the cost of producing one more unit of a good, could potentially increase if the firm is operating in the short run and has already used up its variable inputs. In this case, the firm would need to start using its fixed inputs (like capital), which are typically more expensive to adjust.

Therefore, the correct answer is E. MC, AVC, and ATC increase. The Average Total Cost (ATC) would increase as a result of increases in both AVC and MC.

Knowee AI · Accepted Answer

If a firm chooses to use very little capital in production, it means that it is primarily relying on labor or other variable inputs for production. This could lead to an increase in variable costs, as the firm may need to hire more labor or purchase more of other variable inputs to maintain the same level of production. Therefore, the Average Variable Cost (AVC) would increase.

However, the decision to use less capital does not necessarily affect the firm's fixed costs, as these costs are incurred regardless of the level of production. Therefore, the Average Fixed Cost (AFC) would not increase.

The Marginal Cost (MC), which is the cost of producing one more unit of a good, could potentially increase if the firm is operating in the short run and has already used up its variable inputs. In this case, the firm would need to start using its fixed inputs (like capital), which are typically more expensive to adjust.

Therefore, the correct answer is E. MC, AVC, and ATC increase. The Average Total Cost (ATC) would increase as a result of increases in both AVC and MC.

If a firm chooses to use very little capital in production, what happens to its costs?A.Only MC increasesB.Only AFC increasesC.Only AVC increasesD.MC and AFC increaseE.MC, AVC, and ATC increaseSUBMITarrow_backPREVIOUS

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