How would each of the following affect the marginal cost function of a bakery (SHIFT UP,...

How would each of the following affect the marginal cost function of a bakery (SHIFT UP, SHIFT DOWN or NO EFFECT)

a. An increase in the monthly rent
b. An increase in the minimum wage of bakers
c. A property tax reduction
d. A decrease in the price of flour
e. An increase in the annual insurance premium

Expert Solution

Marginal cost will show a shift either upwards or downwards, depending upon whether the change influences the level of output. This implies that if there is a change in the fixed cost of production there will be no change in the marginal cost. But if there is a change in the variable cost of production it will change the marginal cost as well.

1) No effect. Monthly rent is a kind of a fixed cost which has to be paid even when there is a change in production or there is no production. It does not depend upon the level of output which means marginal cost will not change.

2) Shifts up. It is a variable cost and increase in variable cost will increase marginal cost as well

3) No effect. It is a kind of a fixed cost. It does not depend upon the level of output which means marginal cost will not change.

4) Shift down. It is a variable cost and decrease in variable cost will decrease marginal cost

5) No effect. It is a kind of a fixed cost. It does not depend upon the level of output which means marginal cost will not change.

Rahul Sunny answered 7 months ago

Determine the following situations, and how they affect the marginal cost function of a company? (Up,...

Determine the following situations, and how they affect the marginal cost function of a company? (Up, Down or No effect) 1. Rise in rent 2. Rise in labor wages 3. Property tax reduction 4. Drop at the price of inventory 5. A rise in yearly insurance plan

How would each of the factors in the following table affect a firm’s cost of debt,...

How would each of the factors in the following table affect a firm’s cost of debt, , its cost of equity, , and its weighted average cost of capital, WACC? Indicate by a plus (+), a minus (−), or a zero (0) if the factor would increase, reduce, or have an indeterminate effect on the item in question. Assume that all other factors are held constant. Be prepared to justify your answer, but recognize that several of the parts probably...

Explain how a change (upward shift or downward shift) in each of the following factors would...

Explain how a change (upward shift or downward shift) in each of the following factors would alter the shape of the total product curve for medical care. A. An increase of education spending. B. An improvement in lifestyle. C. An improvement in the environment

Suppose the marginal damages function for a bakery (the pollutee) is: MD = 6E and the...

Suppose the marginal damages function for a bakery (the pollutee) is: MD = 6E and the marginal abatement cost function for a nearby shoe factory (the polluter) is: MAC = 400 – 4E where E is emissions in tonnes, and costs and damages are measured in thousands of dollars per tonne. Suppose also that the shoe factory is now liable for any damages it causes the bakery. Using above information, complete the below statements, filling in your final, complete answer...

How would low air pressure affect the function of the cochlea? How would this affect a...

How would low air pressure affect the function of the cochlea? How would this affect a sense of audition?

How would each of the following scenarios affect a firms cost of debt , Rd (1-T)...

How would each of the following scenarios affect a firms cost of debt , Rd (1-T) , its cost of equity, Rs, and its WACC. Indicate with a (+), a minus (-), or a zero (0) whether the factor would raise , lower, or have indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true. Be prepared to justify your answer but...

Discuss both the full-cost pricing strategy and the marginal-cost pricing strategy and explain how each would...

Discuss both the full-cost pricing strategy and the marginal-cost pricing strategy and explain how each would apply to your health care clinic. How would target costing affect your business?

How would each of the following scenarios likely affect (that is, exacerbate (that is, make a...

How would each of the following scenarios likely affect (that is, exacerbate (that is, make a bad situation worse) or mitigate (that is, make it less painful or severe) the occurrence of a financial crisis (explain briefly): Fearing potential contagious effects, the IMF suggests that it stands ready to bailout a country which may face a financial crisis. b. The threat of an eventual intervention by the IMF demanding that the country that is about to face a financial crisis...

How does an increase in the marginal propensity to consume affect the consumption function? What happens...

How does an increase in the marginal propensity to consume affect the consumption function? What happens to the equilibrium output? Illustrate your answer with a graph.

Describe at least two factors that can shift up the marginal product of labor—that is, at...

Describe at least two factors that can shift up the marginal product of labor—that is, at every quantity of labor, productivity is increased.

Question