Explain how selling costs influence a firm's cost curves and its average total cost
What will be an ideal response?
Selling costs increase a firm's fixed cost, which increase the firm's total cost. This means that an increase in selling costs shifts the average fixed cost (AFC) curve and the average total cost (ATC) curve upward. Variable costs do not change, so the marginal cost (MC) and average variable cost (AVC) curves remain unchanged.
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A system of property rights
A) encourages economic growth by creating incentives to invest in capital and to be innovative. B) discourages economic growth by discouraging the development of new ideas and ways of doing things. C) reduces the efficiency of government, which reduces the growth rate of the economy over time. D) encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain.
The price of a financial asset should be equal to
A) the face value of the asset divided by the interest rate. B) the present value of payments to be received from owning that asset. C) the face value of the asset. D) the present value of the sum of the coupon payments and the interest rate.