Explain how the listed events (a-d) would affect the following at Hilton Hotels.
i. Marginal cost
ii. Average variable cost
iii. Average fixed cost
iv. Average total cost
a. Hilton decides on an across-the-board 5 percent increase in executive salaries.
b. Hilton decides to eliminate all print advertising.
c. Hilton signs a new contract with the Culinary Workers Union that requires the company to increase wages for all its kitchen workers.
d. The federal government starts to levy a $5 room tax on all hotel rooms.
a. Average fixed cost and average total cost will increase; marginal cost and average variable cost will be unaffected.
c. Average fixed cost and average total cost will decrease; marginal cost and average variable cost will be unaffected.
c. Marginal cost, average variable cost and average total cost will increase; average fixed cost will be unaffected.
d. Marginal cost, average variable cost and average total cost will increase; average fixed cost will be unaffected.
You might also like to view...
In a two-period model, holding everything else constant, an increase in current taxes
A) unambiguously increases the current account surplus. B) unambiguously decreases the current account surplus. C) has an uncertain effect on the current account surplus. D) has no effect on the current account surplus, as long as Ricardian equivalence holds.
Economic models are most useful in
A) predicting changes in one variable due to a change in one or more other variables. B) predicting the direction of the stock market. C) explaining the future with the past. D) generating untestable hypotheses.