Imposition of an output tax on all firms in a competitive ...

[RODY.ELKHALIL]

Imposition of an output tax on all firms in a competitive industry will result in
 
  A) a downward shift in each firm's marginal cost curve.
  B) a downward shift in each firm's average cost curve.
  C) a leftward shift in the market supply curve.
  D) the entry of new firms into the industry.
  E) higher profits for the industry as price rises.

Question 2

A farmer uses M units of machinery and L hours of labor to produce C tons of corn, with the following production function C = L0.5M0.75. This production function exhibits
 
  A) decreasing returns to scale for all output levels
  B) constant returns to scale for all output levels
  C) increasing returns to scale for all output levels
  D) no clear pattern of returns to scale

[popopong]

Answer to Question 1

C

Answer to Question 2

C

[RODY.ELKHALIL]

Thank you

[popopong]

Happy to help you