Marginal Analysis and Profit Maximization
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Please use the attached scenario to help answer the four questions below:
Identify whether the change in the price of the database is a fixed or variable cost
Describe how total, average, variable, and marginal costs will change after the change in the database price
Identify whether the rent increase is a fixed or variable cost
Describe how total, average, variable, and marginal costs will change after the rent increase
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Please use the attached scenario to help me answer the four questions below:
Identify whether the change in the price of the database is a fixed or variable cost
The change in price of the database has two parts namely the monthly access fee of $100 that has been reduced to $25 and the per-booking fee of $15 that has been reduced to $5. The fixed cost does not change with every unit of output but the variable cost changes with every change in output. Lucy Wells pays the booking fee with every output (booking) so the per booking fee is the variable cost On the other hand the per month access cost to database does not change with output or with every book. So the per month access charge to the database is the fixed cost. Even though the per month charge to the data base has changed, it is still a fixed cost.
Describe how total, average, variable, and marginal costs will change after the change in the ...
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- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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