Consider a firm with one fixed cost, rent, and one variable cost, wages. Describe the effects of an increase of this firm's rent
The firm's ATC curve shifts up, but the AVC and MC curves don't change since they depend only on
variable costs. Although the firm's ATC curve will shift up, it will continue to produce the same level of
output where its price equals its marginal cost. Its profits fall and, perhaps, become negative.
You might also like to view...
Monetary policy is controlled by the U.S. Congress
Indicate whether the statement is true or false
When a person buys a bond of the XYZ Corporation, he or she can expect to
A. pay the corporation a certain amount of money each quarter of the year. B. receive the face value of the bond each year and the face value of the bond when the bond matures. C. receive the coupon rate times the face value of the bond each year and the face value of the bond when the bond matures. D. receive the face value of the bond each year in perpetuity.