QUESTION 12

The region of Sicily in Italy recently passed a regulation requiring commercial pesticide applicators that use restricted-use pesticides and regulated herbicides to pay a licensing fee of 2,500. As a result of this fee, the costs incurred bycommercial pesticide companies will change as follows:

A) Marginal cost will increase, while average variable cost and average total cost will stay the same.

B) Marginal cost and average variable cost will be unchanged, while total fixed cost will increase.

C) Marginal cost and average total cost will be unchanged, while total fixed cost will increase.

D) Marginal cost, average fixed cost and average variable cost will increase.

E) Marginal cost, average fixed cost and average total cost will increase.