Which action is most likely to reduce short-term costs by changing inputs used?

Which action is most likely to reduce short-term costs by changing inputs used?

• A. Use cheaper inputs
• B. Increase selling price
• C. Expand into new markets
• D. Increase advertising budget

Answer: (A)

Using cheaper inputs lowers short-term costs by reducing the variable cost per unit of production. When you switch to less expensive materials or resources, the cost to produce each unit drops right away, improving overall profitability in the near term without needing to change the selling price or demand conditions. The other options don’t reduce input costs: raising the selling price affects revenue and can impact demand rather than cutting costs; expanding into new markets often raises costs due to setup, logistics, and marketing; and increasing the advertising budget adds to expenses rather than lowering them.

Using cheaper inputs lowers short-term costs by reducing the variable cost per unit of production. When you switch to less expensive materials or resources, the cost to produce each unit drops right away, improving overall profitability in the near term without needing to change the selling price or demand conditions. The other options don’t reduce input costs: raising the selling price affects revenue and can impact demand rather than cutting costs; expanding into new markets often raises costs due to setup, logistics, and marketing; and increasing the advertising budget adds to expenses rather than lowering them.