When firm must pay lump sum tax (which is a fixed sum, independent of whether it produces any output): fixed cost of production will [increase, decrease, remain the same] , marginal cost of production will [increase, decrease, remain the same] , average cost of production will ["", "", ""] .

When firm must pay lump sum tax (which is a fixed sum, independent of whether it produces any output): fixed cost of production will [increase, decrease, remain the same] , marginal cost of production will [increase, decrease, remain the same] , average cost of production will ["", "", ""] .

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter11: Labor Markets

Section: Chapter Questions

Problem 1SQ

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

When firm must pay lump sum tax (which is a fixed sum, independent of whether it produces any output):
- fixed cost of production will [increase, decrease, remain the same] ,
- marginal cost of production will [increase, decrease, remain the same] ,
- average cost of production will ["", "", ""] .

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