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    firm's marginal, average, and average variable cost curves

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    1. If the demand elasticity for a product is -2, and a profit-maximizing firm sells the product for $10, what is its marginal cost?

    2. How would each of the following affect the firm's marginal, average, and average variable cost curves?
    (1) an increase in wages
    (2) a decrease in material costs
    (3) the government imposes a fixed amount of tax
    (4) the rent that the firm pays on the building that it leases decreases

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    https://brainmass.com/economics/macroeconomics/firms-marginal-average-average-variable-cost-curves-85642

    Solution Preview

    1. If the demand elasticity for a product is -2, and a profit-maximizing firm sells the product for $10, what is its marginal cost?
    For profit maximization
    (1+M)=Ep/(1+Ep)
    Where M=Mark up, ...

    Solution Summary

    Predict a firm's marginal, average, and average variable cost curves.

    $2.19