Reference no: EM133519742

Question

The city government is considering two tax proposals:

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

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

1. Which of the following statements is true as a result of the lump-sum tax? Check all that apply.

Marginal cost will remain unchanged.

Average fixed cost will decrease.

Average total cost will increase.

Average variable cost will increase.

2. Which of the following statements is true as a result of the per-burger tax? Check all that apply.

Average total cost will increase.

Average fixed cost will remain unchanged.

Average variable cost will increase.

Marginal cost will remain unchanged.