Explore BrainMass
Share

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

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

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

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