Question

Every candle maker in Town A must have a license. The cost of a license is the same regardless of the number of candles a business produces. Assume that the candle market is perfectly competitive. i. Does this license shift a candle​ maker's short-run average fixed cost​ curve? ii. Does this license shift a candle​ maker's short-run average variable cost​ curve? iii. Does this license shift a candle​ maker's short-run​ profit-maximizing choice of the number of candles to​ produce? With the​ license, the​ short-run average fixed cost curve ▼ and the​ short-run average variable cost curve ▼ shifts down remains unchanged shifts up . The license ▼ does not change increases decreases the​ short-run profit-maximizing quantity of candles to produce. Candle makers in Town B do not need a license. Town​ B, however, has passed a new minimum wage law that increases increases the minimum wage that candle makers in Town B pay their workers. Assume that the candle market is perfectly competitive. i. Does this higher higher minimum wage shift a candle​ maker's short-run average fixed cost​ curve? ii. Does this higher higher minimum wage shift a candle​ maker's short-run average variable cost​ curve? iii. Does this higher higher minimum wage shift a candle​ maker's short-run​ profit-maximizing choice of the number of candles to​ produce? With the higher higher minimum​ wage, the​ short-run average fixed cost curve ▼ remains unchanged shifts up shifts down and the​ short-run average variable cost curve ▼ shifts up remains unchanged shifts down . The higher higher minimum wage ▼ increases does not change decreases the​ short-run profit-maximizing quantity of candles to produce.

Answer 1