How would each of the following affect the firm’s marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves?
The government imposes a fixed amount of tax.
(A) decrease MC, no change AVC, decrease ATC
(B) increase MC, increase AVC, increase ATC
(C) no change MC, no change AVC, increases ATC
(D) increase MC, no change AVC, increase ATC
(E) decrease MC, decrease AVC, decrease ATC
(F) no change MC, no change AVC, decreases ATC
An increase in wages.
(A) decrease MC, no change AVC, decrease ATC
(B) increase MC, increase AVC, increase ATC
(C) no change MC, no change AVC, increases ATC
(D) increase MC, no change AVC, increase ATC
(E) decrease MC, decrease AVC, decrease ATC
(F) no change MC, no change AVC, decreases ATC
A decrease in material costs.
(A) decrease MC, no change AVC, decrease ATC
(B) increase MC, increase AVC, increase ATC
(C) no change MC, no change AVC, increases ATC
(D) increase MC, no change AVC, increase ATC
(E) decrease MC, decrease AVC, decrease ATC
(F) no change MC, no change AVC, decreases ATC
The rent that the firm pays on the building that it leases decreases.
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