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1. Read the article below and answer the following questions.Coffee King Starbucks Raises Its PricesBlame the sour news at Starbucks this week on soaring milk costs. The wholesale price [of]milk is up nearly 70% in the last 12 months. "There's a lot of milk in those (Starbucks)lattes," notes John Glass, CIBC World Markets restaurant analyst.
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' short-run cost curves.
c) What would happen to the short-run cost curves if instead of an increase in the price of milk, a fixed cost increased?
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