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Result of the per-burger tax

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Reference no: EM131277993

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.

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 graph. Label the graph as precisely as possible.

Reference no: EM131277993

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