The following graph shows the average total cost curve (ATC), average variable cost curve (AVC), and average fixed cost curve (AFC) for Caroline's Pizza Parlor when the retail price Caroline pays for pizza sauce, including sales tax, is $15 per gallon. PRICE (Dollars per pizza) AVC ATC OUTPUT (Pizzas per day) AFC Suppose the sales tax on pizza sauce is removed, so the price of pizza sauce decreases to $14 per gallon. In the following table, indicate how each curve is affected, if at all. Cost Average Total Cost Average Variable Cost Average Fixed Cost Effect on Cost and Curve
The following graph shows the average total cost curve (ATC), average variable cost curve (AVC), and average fixed cost curve (AFC) for Caroline's Pizza Parlor when the retail price Caroline pays for pizza sauce, including sales tax, is $15 per gallon. PRICE (Dollars per pizza) AVC ATC OUTPUT (Pizzas per day) AFC Suppose the sales tax on pizza sauce is removed, so the price of pizza sauce decreases to $14 per gallon. In the following table, indicate how each curve is affected, if at all. Cost Average Total Cost Average Variable Cost Average Fixed Cost Effect on Cost and Curve
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Uncertain which options match each blank:
a. Decreases, and therefore the curve shifts down
b. Is unaffected, and therefore the curve does not shift
c. Increases, and therefore the curve shifts up
Transcribed Image Text:The following graph shows the average total cost curve (ATC), average variable cost curve (AVC),
and average fixed cost curve (AFC) for Caroline's Pizza Parlor when the retail price Caroline pays
for pizza sauce, including sales tax, is $15 per gallon.
PRICE (Dollars per pizza)
AVC
ATC
OUTPUT (Pizzas per day)
AFC
Suppose the sales tax on pizza sauce is removed, so the price of pizza sauce decreases to $14 per
gallon.
In the following table, indicate how each curve is affected, if at all.
Cost
Average Total Cost
Average Variable Cost
Average Fixed Cost
Effect on Cost and Curve
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