If General Motors cuts back production on the Hummer because of ...

[hbsimmons88]

If General Motors cuts back production on the Hummer because of high gasoline prices what should you expect to happen to the average fixed cost of production? What about the average total cost?
 
  What will be an ideal response?

Question 2

What is the drop-in-the-bucket problem?
 
  What will be an ideal response?

[bpool94]

Answer to Question 1

Average fixed costs should rise since the fixed costs will be spread over fewer units. With higher average fixed costs this should also push up the average total cost as well.

Answer to Question 2

The drop-in-the-bucket problem is that public goods are usually so expensive that their provision generally does not depend on whether or not any single person pays. Their contribution is considered to be a drop in the bucket.

[hbsimmons88]

Thank you

[bpool94]

No problemo