Question

How will the marginal and average cost curves of the typical pure competitor shift or change as a result of the following events:

a. an increase in wages of all labor;

b. an increase in the rental payments on office machinery;

c. a technological advance; d. an increase in sales taxes;

e. an increase in property taxes; and

f. a decline in the price of a basic raw material?

Answer 1

A) It will increase the marginal and average cost curves of the computer and shift both curves parallelly upward

b)Increase in reantak payment on office machinery will not change the marginal cost but it will increase the average cost and it will shift the average cost curve upward

c)an advancement of technology will decrease both the marginal cost and average cost which leads to downward shift of these curves.

d)an increase in sales tax will increase the marginal and average cost and will shift both curves parallelly upward

e)an increase in property tax will shift the average cost curve upward but doesnot change the marginal cost curve

f) decrease in price of raw material will decrease both the marginal and average cost curve and will shift these cost curve downward

answered by: anonymous