Customers at California grocery and drug s ores must pay an extra 10¢ for every

Question

Customers at California grocery and drug s ores must pay an extra 10¢ for every paper bag hat the s ore provides the store keeps his ee to affect the overall amount that consumers pay for groceries? Does such a charge affect e marginal cost? so by how much? s this ee like A. does not change the marginal cost of each purchase that includes a bag. 0 B. increases the marginal cost of each purchase that includes a bag by more than 10 C. decreases the marginal cost of each purchase that includes a bag by 10 0 D. increases the marginal cost of each purchase that includes a bag by 10 E. increases the marginal cost of each purchase that includes a bag by less than 10¢ Assume the relevant market supply curve is upward sloping (but not horizontal or vertical) and the market demand curve is downward sloping (but not How much of the fee is therefore likely to be passed on to consumers? The portion of the fee that is likely to be passed along to consumers is A, 096. OB, more than 100%. ° C. 100%. D. more than 0% but less than 100%. 0 E exactly 50%.

Explanation / Answer

1) The answer is A .) Does not change the marginal cost of each purcahse that includes a bag.

because, A bag fee is the fee of service that a customers rendered. and for a wholsaler or retailer, it is not a production cost its neither increase or decrease the marginal cost .

2) The answer is C-) 100%

because, a bag fee is 10. which has to be paid by consumer if he wants the bag . so it not shared by producer or retailer because it is not a tax . therefore, all 100% fees is passed along to consumers.

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