When the Rent-A-Limo Company negotiates its new labor contract it finds that the wages it must pay drivers have increased
How does this wage hike affect the Rent-A-Limo Company's average fixed cost, average variable cost, average total cost, and marginal cost?
The drivers' wages are a variable cost because the number of drivers needed varies with how many limousines are rented. The increase in wages will have no effect on the average fixed cost but the average variable cost will increase. The increase in average variable cost leads to an increase in the average total cost and an increase in the marginal cost.
You might also like to view...
To counteract relative price changes, the government would implement:
A. polices that affect the supply and demand for a specific good. B. fiscal policy. C. monetary policy. D. policies that affect the supply and demand for all goods and services.
Which of the following is an example of a way in which an oligopolistic firm can escape the prisoner's dilemma?
A) advertising that it will match its rival's price B) ignoring the pricing decisions of the other firms C) producing more of its product D) reneging on a previous tacit agreement with rival firms to charge identical high prices
Who is considered officially unemployed?
A. Shauna graduated from college last summer but is still unemployed despite her spirited search. B. Six months after failing to get a job, Antony quits looking. C. Teresa is working part time but she wishes to work full time. D. Chen is going to school full time.
If a profit-maximizing perfectly competitive firm does not have to compensate society for a negative externality, the firm will choose to produce where
A. price equals marginal social cost. B. marginal cost equals marginal social cost. C. marginal revenue equals marginal social cost. D. price equals marginal cost.