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    Average and marginal cost curves

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    Subject: Average and Marginal cost curves.
    Details: Explain how each of the following events will affect the average and marginal cost curves of the firm.
    A. An increase in lease payments.
    B. A decrease in the cost of utilities.
    C. Stricter environmental regulations requiring installation of scrubbers on smokestacks.
    D. An increase in the corporate profit tax.
    E. An increase in learning on the part of labor.

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    Solution Preview

    a. an increase in lease payments.

    Lease is not correlated by production, and won't change the productivity.
    Thus it will only increase total cost, and increase AC, but no effect on MC.
    b. A decrease in utility cost. A decrease in utility cost ...

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