Problems with Cost Curves
4. What effect would each of the following have on a firm's short-run marginal cost curve and its total fixed cost curve?
a. An increase in the wage rate
b. A decrease in the property tax
c. A rise in the purchase price of new capitol.
d. A rise in energy prices.
5. Suppose that a firm's cost per unit of labor is $100 per day and its cost per unit of capital is $400 per day.
a. Draw the isocost line for a total cost per day of $2000.
b. If the firm is producing efficiently, what is the marginal rate of technical substitution between labor and capital?
c. Demonstrate your answer to part (b) using isocost lines and isoquant curves.
...ount of units employed at each output level, which means the upward shift in the variable cost curve will not be parallel. An increase VC results in a similar increase in total cost (TC). As a result MC increases as well depending on the slope of the TC curve.
Total fixed cost is not ...