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
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 new graph. Label the graph as precisely as possible.
I wrote an answer but struggle with the graph, could you please help me?
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