You have collected the following data on output and total variable costs: TVC ($) 24,450 10 20 39,600 48,150 52,800 56,250 30 40 50 60 61,200 70 70,350 86,400 112,050 150,000 80 90 100 Identify the range of output exhibiting increasing returns (increasing MP), and the range exhibiting diminishing returns (decreasing MP). b. Current fixed costs for the company equal $14,300. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and the other shows AVC, AC, and MC. c. Suppose that the government imposes a $11,500 property tax hike on all businesses; how will that affect your two graphs; ie., which cost curves will be affected and how? a.

You have collected the following data on output and total variable costs: TVC ($) 24,450 10 20 39,600 48,150 52,800 56,250 30 40 50 60 61,200 70 70,350 86,400 112,050 150,000 80 90 100 Identify the range of output exhibiting increasing returns (increasing MP), and the range exhibiting diminishing returns (decreasing MP). b. Current fixed costs for the company equal $14,300. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and the other shows AVC, AC, and MC. c. Suppose that the government imposes a $11,500 property tax hike on all businesses; how will that affect your two graphs; ie., which cost curves will be affected and how? a.

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

2. You have collected the following data on output and total variable costs:
TVC ($)
24,450
39,600
10
20
30
48,150
52.800
56.250
61.200
70.350
86.400
40
50
60
70
80
90
100
112,050
150.000
a. Identify the range of output exhibiting increasing returns (increasing MP), and the range exhibiting diminishing returns (decreasing MP).
b. Current fixed costs for the company equal $14,300. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and the other shows AVC, AC, and MC.
c. Suppose that the government imposes a $11,500 property tax hike on all businesses; how will that affect your two graphs; i.e., which cost curves will be affected and how?
d. Suppose instead that the government considers your production process to be polluting, and imposes a S210 tax per unit produced (replacing the property tax in the previous question). How does
this tax increase compare to the property tax increase, in terms of the effect on your company's cost curves?
e. Your boss says "either of these taxes is going to force us to change our production levels." Given what you know about optimization analysis, how would you respond?

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