Question

You are a magazine publisher. You are midway through a​ one-year rental contract for your factory that requires you to pay

$550,000

per​ month, and you have contractual labor obligations of

$1,500,000

per month that you​ can't get out of. You also have a marginal printing cost of

​$$2.00

per magazine as well as a marginal delivery cost of

​$$1.25

per magazine.

Suppose sales fall by

25

percent from

1,500,000

magazines per month to

1,125,000

magazines per month.

The average fixed cost per magazine

▼

falls

rises

from

​$nothing

per magazine to

​$nothing

per magazine. ​(Enter your responses rounded to two decimal​ places.)

Answer 1

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