andcost20151411MCATC750 1.100 1.350 1,800AVCMRQuantityFigure 12-5 shows cost and demand curves facing a typical firm in aconstant-cost, perfectly competitive industry.Refer to Figure 12-5. If the firm's fixed cost increases by $1,000 due to a newenvironmental regulation, what happens in the diagram above?None of the curves shifts; only the fixed cost curve, which is not shown here, isaffected.All the cost curves shift upward.Only the average variable cost and average total cost curves shift upward:marginal cost is not affected.Only the average total cost curve shifts upward; the marginal cost and averagevariable cost curves are not affected.

Total Cost = Total variable cost + Total fixed cost -- (1) Dividing (1) both sides with quantity we…

Answered: and cost 20 15 14 11 5 MC ATC 750 1.100…

and cost 20 15 14 11 5 MC ATC 750 1.100 1,350 1,800 AVC MR Quantity Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

and
cost
20
15
14
11
MC
ATC
750 1.100 1.350 1,800
AVC
MR
Quantity
Figure 12-5 shows cost and demand curves facing a typical firm in a
constant-cost, perfectly competitive industry.
Refer to Figure 12-5. If the firm's fixed cost increases by $1,000 due to a new
environmental regulation, what happens in the diagram above?
None of the curves shifts; only the fixed cost curve, which is not shown here, is
affected.
All the cost curves shift upward.
Only the average variable cost and average total cost curves shift upward:
marginal cost is not affected.
Only the average total cost curve shifts upward; the marginal cost and average
variable cost curves are not affected.

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