4. What effect would each of the following have on a firm's short-run marginal cost curve and its total fixed cost curve?

a. An increase in the wage rate
b. A decrease in the property tax
c. A rise in the purchase price of new capitol.
d. A rise in energy prices.

5. Suppose that a firm's cost per unit of labor is $100 per day and its cost per unit of capital is $400 per day.
a. Draw the isocost line for a total cost per day of $2000.
b. If the firm is producing efficiently, what is the marginal rate of technical substitution between labor and capital?
c. Demonstrate your answer to part (b) using isocost lines and isoquant curves.

4. Fixed costs (FC) are costs that do not vary with the quantity of output produced. Marginal cost (MC) = change in total cost / change in quantity, and slope of TC curve.

a. an increase in the wage rate increases variable cost. The amount of increase in variable cost (VC) will depend on the ...

Solution Summary

The solution does an excellent job in describing the impact of certain events on the cost curves. The solutions goes into some amount of detail when it comes explaining the direction of the impact. However, it is still concise and easy to understand. In the second attachment, the solution draws the isoquant and isocost curves as well. Brief explanation to that is provided as well. This is an excellent response for students looking for concise answers to the problem being asked. Overall, a fair response.

... ATC (average total cost) and MC (marginal cost) and therefore these cost curves? ... a result of the above changes the average fixed cost (AFC) curve will move ...

... B) Why are short-run marginal cost curves expected to slope upward? C) If you know that average costs are increasing, is the marginal cost curve above or below ...

... number of short-run average total cost curves. Such an envelope is base on identifying the point on each short-run average total cost curve that provides the ...

Explain how each of the following will affect the average fixed cost, average variable cost, average total cost, and marginal cost curves faced by a steel ...

... attachment) shows the cost curves for a perfectly competitive firm. Identity the shutdown point, the breakeven point, and the firm's short-run supply curve. ...

... Thank you for using BrainMass. Plotting of cost curves; multiple choice questions related to long-run costs, short-run costs, and shifts in the MC curve. ...

... The solution file is attached. Total cost curves (FC, VC, and TC), Average cost curves (AFC, AVC, and ATC) plus the Marginal cost curve (MC) drawn. ...

... pushes the decrease in prices of curve shifts towards prices downwards a substitute. Demand left. and supply factor curves shifts towards pushes the price left ...