The city government is considering two tax proposals: A lump-sum tax of $300 o each producer of

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The city government is considering two tax proposals:

A lump-sum tax of $300 o each producer of hamburgers.

A tax of $1 per burger, paid by producers of hamburgers.

a. Which of the following curves—average fixed cost, average variable cost, average total cost, and marginal cost—would shift as a result of the lump-sum tax? Why? Show this in a graph. Label the graph as precisely as possible.

b. Which of these same four curves would shift as a result of the per-burger tax? Why? Show this in a new graph. Label the graph as precisely as possible.


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Principles of economics

ISBN: 978-0538453042

6th Edition

Authors: N. Gregory Mankiw

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