Question

Joey's Lawn cutting Service rents office space from Joey's dad for $300 per month. Joey's dad is thinking of increasing the rent to $400 per month (but will not change the cost of mowing an additional lawn). As a result, after the rent hike, Joey's marginal cost of cutting grass will a. increase by $100 divided by the amount of grass cut. b. increase by $100. c. decrease by $100. d. not change.

Answer 1

not change

Step-by-step explanation:

marginal cost is the change in cost by increasing production by one unit. Joey's marginal cost would be unaffected by the increase in rent because Joey has not increased the amount of grass he cuts.

the rents constitutes a fixed cost. Fixed cost is cost that does not vary with production