Consider a textile factory operating in the short run. Classify the following costs that the firm incurs as variable costs, sunk costs, and fixed costs
a) Cost of issuing identity cards to all workers
b) Wages paid to workers of the factory
c) Yearly rent paid for production space
d) Tax paid on the sale of its products
a) Cost of issuing identity cards to all employees is a sunk cost as it is not to be considered while making future production decisions.
b) Wages paid to workers at the mill are variable costs as they change with changes in the output of the production unit.
c) Yearly rent paid for the production space is a fixed cost as the mill has to pay this rent irrespective of the output produced.
d) Tax paid on the sale of the firm's products is a variable cost as the tax will vary depending on the output sold by the firm.
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Real income is redistributed from ________ in the case of ________ inflation
A) creditors to debtors, anticipated B) creditors to debtors, unanticipated C) debtors to creditors, anticipated D) debtors to creditors, unanticipated
Refer to the diagram for a pure monopolist. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set price at:
A. P 1 .
B. P 3 .
C. P 2 .
D. P 4 .