Daniel's Midland Archers (DMA) makes children's wooden practice arrows. Draw a set of representative short-run cost curves
Question:
a. Suppose that Congress imposes a 39-cent excise tax on each children's wooden practice arrow DMA sells. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not?
b. Suppose that the city where DMA produces arrows increases the annual property tax on DMA's factory from $80,000 to $150,000. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not?
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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