(Solution) - Suppose a firm must pay an annual tax which is -(2025 Original AI-Free Solution)
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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?