Polystyrene (also known as styrofoam) is non-biodegradable and is not easily recyclable. In the United States, many cities and at least one state have enacted laws that ban the use of polystyrene containers. These locales understand that banning these containers will force many businesses to turn to other more expensive forms of packaging and cups, but argue the ban is environmentally important.

Suppose my friend Joe owns a firm with a conventional production function resulting in U-shaped ATC, AVC, and MC curves. Finally, suppose that Joe’s business sells takeout food and drinks which are currently packaged in styrofoam containers and cups.

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Totall cost of the product comprises of fixed cost variable cost TC TFCTVC Total fixed cost remain... View the full answer