How does a lump sum tax affect the fixed costs and variable costs of a producer? Select one: O a. A lump sum tax does not affect fixed costs but it does increase variable costs. O b. A lump sum tax decreases both fixed costs and variable costs. O c. A lump sum tax increases fixed costs but it does not affect variable costs. O d. A lump sum tax increases both fixed costs and variable costs.

How does a lump sum tax affect the fixed costs and variable costs of a producer? Select one: O a. A lump sum tax does not affect fixed costs but it does increase variable costs. O b. A lump sum tax decreases both fixed costs and variable costs. O c. A lump sum tax increases fixed costs but it does not affect variable costs. O d. A lump sum tax increases both fixed costs and variable costs.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 7SCQ: Suppose the cost of machines increases to 55, while the cost of labor stays at 40. How would that...

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5:23 The amount that a firm pays for all of the inputs that go into producing goods and services is the: O average cost. O total revenue. O total price. O total cost.
Many businesses taco increasing marginal costs because___ O A. in order to increase output, you have to purchase more inputs.O B. a business may have to shift to more expensive sources of inputs in order to increase output.O C. most businesses are not near capacity.OD. when the price falls, output increases.
1.A 15 per cent increase in all inputs leads to only a 5 per cent increase in the output. Are the returns to scale increasing, constant or diminishing? Illustrate your answer2.What is the slope of an iso-cost line equal to and why? Provide mathematical explanation3.“By definition, cost is zero if a firm does not hire any input. Hence cost-minimization essentially means shutting down the operation of the firm.” Do you agree with the statement? Justify you answer by giving an explanation from microeconomic theory.4.What is meant by an expansion path? Illustrate expansion paths for a normal input and an inferior input.
a. Why will firms in most markets be located at or close to the bottom of the longrun average cost curve? b. Distinguish between implicit and explicit costs. How is it possible to havepositive accounting profit and negative economic profit concurrently? c. Distinguish between economies of scale and constant returns to scale. What shape will the long-run average cost curve have for economies of scale andconstant returns to scale. d. What is the difference between production in the short run and production in the long run? Explain the shape of the long-run cost curve in relation to shortrun cost curves?
. What are the firm's fixed costs?$ c. What is the variable cost of producing 475 units of output (use least-cost)?$ d. How many units of the variable input should be used to maximize profits?e. What are the maximum profits this firm can earn?$ f. Over what range of the variable input usage do increasing marginal returns exist?From ___ to ____g. Over what range of the variable input usage do decreasing marginal returns exist?From ___ to ___h. Over what range of input usage do negative marginal returns exist?From ___ to ___ . What are the firm's fixed costs?$ c. What is the variable cost of producing 475 units of output (use least-cost)?$ d. How many units of the variable input should be used to maximize profits?e. What are the maximum profits this firm can earn?$ f. Over what range of the variable input usage do increasing marginal returns exist?From to g. Over what range of the…
8. Why can the distinction between fixed costs and variable costs be made in the short run? Classify the following as fixed or variable costs: advertising expenditures, fuel, interest on company-issued bonds, shipping charges, payments for raw materials, real estate taxes, executive salaries, insurance premiums, wage payments, sales taxes, and rental payments on leased office machinery. LO4
6. Which of the following are true (check all that apply) Note: IRTS=increasing returns to scale, CRTS=constant returns to scale, DRTS=decreasing returns to scale a. if the production function exhibits IRTS, then the cost function will exhibit economies of scale b. if the production function exhibits IRTS, then the cost function will exhibit diseconomies economies of scale c. if the cost function exhibits diseconomies of scale, then the producing function exhibits DRTS d. if the production function exhibits CRTS, then the cost function will exhibit constant economies of scale e. if the production function exhibits DRTS then the cost function will exhibit diseconomies of scale
12. Which of the following statements about direct and indirect costs is/are likely to be true? Note: multiple answers possible. Group of answer choices Whether a fixed cost is classified as direct or indirect cost depends on whether the level of production is within or outside the relevant range. Reliability of cost data is usually enhanced with more, rather than less, direct cost categories With the right allocation base, the assignment of indirect costs to a cost object will typically be more accurate than the assignment of direct costs to the same cost object While each indirect cost item would have one or more cost drivers, direct cost items do not typically have a cost driver.
(Continued) Suppose that the rent for capital is $1 per unit, and the wage for labor is $2 per unit. In the short run, Firm ABC uses 2 27 units of capital to produce 12 units of output. (hint: 83 = 4) How many units of labor does Firm ABC hire? What is the short-run total cost for 12 units of output? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
In the short run production function O a. All inputs are variable O b. All inputs are fixed O C. There are fixed and variable inputs Od. Technology alone is variable
2.)Do fixed costs refer to the long run or short run? Why?3) Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?4) What are economies of scale? What are economies of scope? What is the difference between the two?
32. Assuming labor is the only cost for production, a firm hires labor up to the point at which the wage equals (i) the value of the marginal product of labor, (ii) the marginal cost of an additional unit of output, (iii) output price multiplied by the marginal product of labor, for maximum profit. O (i) and (iii) only O (i) and (ii) only (ii) and (iii) only O (i), (ii), and (iii)