This topic contains a solution. Click here to go to the answer

Author Question: A firm observes that in order to minimize the average cost, it must produce 25,000 units of output. ... (Read 74 times)

ghost!

  • Hero Member
  • *****
  • Posts: 560
A firm observes that in order to minimize the average cost, it must produce 25,000 units of output. Suppose the government imposes a specific tax on the output of the firm.
 
  Will the output level required to minimize the average cost increase, decrease, stay the same or is it uncertain? Can you tell how much the minimum average cost will change by? Explain.

Question 2

A new law applied to a competitive market that requires that laid off workers be paid a large severance payment will
 
  A) not generate a deadweight loss.
  B) increase total welfare.
  C) increase consumer surplus in the market.
  D) decrease consumer surplus in the market.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

gcook

  • Sr. Member
  • ****
  • Posts: 343
Answer to Question 1

The specific tax results in a parallel vertical shift of the average cost by the amount of the tax. Therefore, the minimum point will shift up by precisely the tax. The output level which minimizes the average cost will not change.

Answer to Question 2

D




ghost!

  • Member
  • Posts: 560
Reply 2 on: Jul 1, 2018
Excellent


sultansheikh

  • Member
  • Posts: 335
Reply 3 on: Yesterday
Gracias!

 

Did you know?

Cytomegalovirus affects nearly the same amount of newborns every year as Down syndrome.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

Did you know?

Anti-aging claims should not ever be believed. There is no supplement, medication, or any other substance that has been proven to slow or stop the aging process.

Did you know?

Each year in the United States, there are approximately six million pregnancies. This means that at any one time, about 4% of women in the United States are pregnant.

For a complete list of videos, visit our video library