With the tax at $10 per unit of output, at what output is the value for the new AC at it’s minimum? With the level of fixed cost at 50,000 at what output is the value for the new AC at its minimum? 345TC300,000250,000200,000150,000100,00050,000TC (BASE)TC (NEW)00 1500 3000 4500 6000 7500 9000MC, AC10080604020MC(NEW)MC(BASE)AC(NEW)AC(BASE)00 1500 3000 4500 6000 7500 9000BASELINE COSTSTC (BASE)AC (BASE)MC (BASE)TC (NEW)AC (NEW)MC (NEW)NEW COSTSOutputFixed costPOLICY VARIABLESTax per unitAC(NEW)-MC(NEW)Questions$102,430$25.61$35.56Go to answer sheetReset to baselinePrint$127,430$31.86$35.564,00050,000$0.00-$3.70 ATC300,000250,000200,000150,000100,00050,0000+Q0 1500 3000 4500 6000 7500 9000MC, AC1008060402000TC (BASE)TC (NEW)MC(NEW)MC(BASE)AC(NEW)AC(BASE)1500 3000 4500 6000 7500 9000BASELINE COSTSTC (BASE)AC (BASE)MC (BASE)TC (NEW)AC (NEW)MC (NEW)NEW COSTSOutputFixed costPOLICY VARIABLESTax per unitAC(NEW)-MC(NEW)Questions$102,430$25.61$35.56Go to answer sheetReset to baselinePrint$142,430$35.61$45.564,00025,000$10.00-$9.95

Answered: With the tax at $10 per unit of output,…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

With the tax at $10 per unit of output, at what output is the value for the new AC at it’s minimum? With the level of fixed cost at 50,000 at what output is the value for the new AC at its minimum?

3
4
5
TC
300,000
250,000
200,000
150,000
100,000
50,000
TC (BASE)
TC (NEW)
0
0 1500 3000 4500 6000 7500 9000
MC, AC
100
80
60
40
20
MC(NEW)
MC(BASE)
AC(NEW)
AC(BASE)
0
0 1500 3000 4500 6000 7500 9000
BASELINE COSTS
TC (BASE)
AC (BASE)
MC (BASE)
TC (NEW)
AC (NEW)
MC (NEW)
NEW COSTS
Output
Fixed cost
POLICY VARIABLES
Tax per unit
AC(NEW)-MC(NEW)
Questions
$102,430
$25.61
$35.56
Go to answer sheet
Reset to baseline
Print
$127,430
$31.86
$35.56
4,000
50,000
$0.00
-$3.70

A
TC
300,000
250,000
200,000
150,000
100,000
50,000
0
+
Q
0 1500 3000 4500 6000 7500 9000
MC, AC
100
80
60
40
20
0
0
TC (BASE)
TC (NEW)
MC(NEW)
MC(BASE)
AC(NEW)
AC(BASE)
1500 3000 4500 6000 7500 9000
BASELINE COSTS
TC (BASE)
AC (BASE)
MC (BASE)
TC (NEW)
AC (NEW)
MC (NEW)
NEW COSTS
Output
Fixed cost
POLICY VARIABLES
Tax per unit
AC(NEW)-MC(NEW)
Questions
$102,430
$25.61
$35.56
Go to answer sheet
Reset to baseline
Print
$142,430
$35.61
$45.56
4,000
25,000
$10.00
-$9.95

Expert Solution

Step 1: Define Average Cost

Average cost, also known as average total cost (ATC), is a financial metric used in economics and business to evaluate the efficiency of production or operations. It is calculated by dividing the total cost of production by the quantity of goods or services produced.

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