Problem 5:The local government in Karachi is considering two tax proposals:

A lump-sum tax of Rs. 300 on each producer of Ice-cream.

A tax of Rs. 1 per unit of Ice-cream, paid by producers of Ice-cream.

a.Which cost curves; average fixed cost, the average variable cost, average total cost, and marginal cost would shift as a result of the lump-sum tax? Why?

b.Which cost curves; average fixed cost, the average variable cost, average total cost, and marginal cost would shift as a result of the per-unit tax? Why?