ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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decline in productivity
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improvement in productivity
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a tax on a fixed cost of production
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decrease in average fixed cost
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Detailed explanation-1: -Which of the following would cause the change in ATC but not affect AVC or MC? explanation: A tax on a fixed cost of production changes fixed costs, which are not included in the calculation of variable costs and marginal costs.
Detailed explanation-2: -An increase in fixed cost shifts the AFC and ATC upward but does not shift MC and AVC. Economic profits (EP) are defined as the difference between total costs (TC) and total revenue (TR).
Detailed explanation-3: -Answer and Explanation: The marginal cost intersects the AVC and ATC at their minimum point because, at the lowest point, the curves become equal to each other. At the minimum point, the ATC = MC = AVC.
Detailed explanation-4: -A firm’s rent-seeking costs are fixed costs. They add to total fixed cost and to average total cost. The ATC curve shifts upward until, at the profit-maximizing price, the firm breaks even.