Question

Coffee King Starbucks Raises Its Prices Blame the sour news at Starbucks this week on soaring milk cost. … The wholesale price of milk is up nearly 70% in the 12 months. … “There’s a lot of milk in those [Starbucks] lattes,” notes John Glass, CIBC World Markets restaurant analyst. USA Today, July 24, 2007 a. Is milk a fixed factor of production or a variable factor of production? b. Describe how the increase in the price of milk changes Starbucks’s short run cost curve.

Answer 1

The milk as a factor of production is known as a variable factor of production and the increase in the price of milk changes Starbucks’s short run cost curve as the AVC, ATC and MC curves upward.

What is variable factor of production?

These are those production factors that do change with output, that is. more are employed when production increases and less are usued when production decreases.

Some examples of a variable factors include labour, energy, and raw materials directly used in production.

However, the milk is also an example of a variable factor for Starbuck because the price of the raw material for producing its coffee keeps inculcating with economic trends.

Hence, the milk as a factor of production is known as a variable factor of production and the increase in the price of milk changes Starbucks’s short run cost curve as the AVC, ATC and MC curves upward.

Read more about variable factor

brainly.com/question/2804470

#SPJ1