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.

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...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 ...