Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether it produces any output. a) How does this tax affect the firm's fixed, marginal, and average costs? b) Now suppose the firm is charged a tax that is proportional to the number of items it produces. Again, how does this tax affect the firm's fixed, marginal, and average costs?

Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether it produces any output. a) How does this tax affect the firm's fixed, marginal, and average costs? b) Now suppose the firm is charged a tax that is proportional to the number of items it produces. Again, how does this tax affect the firm's fixed, marginal, and average costs?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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