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What is the effect of a lump-sum franchise tax of t on the quantity at which a firm's after-tax average cost curve reaches a minimum?
What is the effect of a lump-sum franchise tax of t on the quantity at which a firm's after-tax average cost curve reaches a minimum? (Assume that the firm's before-tax average cost curve, ACT, is U-shaped.) Determine the average tax per unit of output. The average tax per unit of output, q, is ACBT average tax = (Properly format your expression using the tools in the Cost per unit, $ palette. Hover over tools to see keyboard shortcuts. E.g., a fraction can be created with the / character.) For example, if the firm sells only 1 unit of output, then its average cost in taxes is equal to q, Units of output
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