1) All else equal, if the price of a firm variable input were to
fall the Marginal cost will fall because it is the cost of one
extra unit employed in the production. The average variable cost
will fall because it is the average cost of the variable inputs
lower the cost lower the average will be. and ATC will fall but not
the Fixed cost. Fixed cost will remain the same but the total cost
will fall as the average variable cost is falling. The
correct answer is "C".
2) The basic characteristics of the short run are that the firms
do not have the sufficient time to change the size of its capital.
Thye can easily change the output and the variable inputs like
labor. The correct answer is "A".