12. Suppose a manufacturing firm learns that its annual property tax payments will decrease. We would depict this by:
Property Tax payments are a fixed cost since they don't change if the firm changes its output. If they decrease only those curves which contain a fixed cost component will shift downward. Other curves will not change.
- shifting the average fixed cost, the marginal cost, and the average total cost curves up.
Wrong for two reasons: 1. the curves should shift down, not up, and marginal cost would not shift at all due to a change in fixed cost.
- shifting the average total, the average fixed, and the average variable cost curves down.
Wrong because marginal cost would not shift at all due to a change in fixed cost.
- shifting the marginal cost, the average variable cost, and the average fixed cost curves down.
Wrong because marginal cost and average variable cost would not shift at all due to a change in fixed cost.
- shifting the marginal cost, the average total cost, and the average fixed cost curves down.
Wrong because marginal cost would not shift at all due to a change in fixed cost.
- shifting the average total, and the average fixed cost curves downward.
Correct because the curves shift downward and both Average Total Cost and Average Fixed Cost curves contain Fixed Cost components.
