A firm enters into a consent decree to avoid an even greater legal setback.If the terms of the consent decree effectively double the firm's fixed costs, then
A)marginal cost more than doubles
B)marginal cost doubles
C)marginal cost remains unchanged
D)average total cost remains unchanged
E)average variable cost doubles

Question

Quizplus · Accepted Answer

A consent decree that doubles fixed costs does not affect marginal cost, as marginal cost is related to variable costs, not fixed costs.

A Firm Enters into a Consent Decree to Avoid an Even