-Sandra's Sweaters' production function is shown in the above table. Sandra rents three knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. If the rental rate of capital rises to $50 per machine a day, Sandra's ________ curve shifts upward.
A) average variable cost
B) total variable cost
C) average fixed cost
D) marginal cost

Question

-Sandra's Sweaters' production function is shown in the above table. Sandra rents three knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. If the rental rate of capital rises to $50 per machine a day, Sandra's ________ curve shifts upward.
A) average variable cost 
B) total variable cost 
C) average fixed cost 
D) marginal cost

Quizplus · Accepted Answer

The rental rate of capital is a fixed cost, so an increase in this cost will shift the average fixed cost curve upward.

-Sandra's Sweaters' Production Function Is Shown in the Above Table