4. Using a diagram with short-run average total cost, average variable cost, and marginal
cost, show how each of the following events will affect the cost curves of ABC Eyeglass
Company, a small manufacturing firm that produces sunglasses. Consider each case
separately (i.e., draw a separate diagram for each event) and assume that the cost curves
have their usual shapes.
a. The price of glass rises
b. The wage rate of its workers falls.
c. The government imposes a tax of $3.00 on each pair of sunglasses produced.
d. The local property taxes of ABC are increased from $4,000 to $6,000. (Note: the
amount of the tax does not depend upon the output of the firm.)