   Chapter 21, Problem 17QP

Chapter
Section
Textbook Problem

The government says that firm X must pay $1,000 in taxes simply because it is in the business of producing a good. What cost curves, if any, does this tax affect? To determine Explain if tax rate increases what happens to cost curves. Explanation If tax increases the fixed costs by$1000, then it affects the total cost and total cost and average fixed cost.

Total cost:

Total cost can be calculated by using the following formula:

Total cost=Total fixed cost+Total variable cost        (1)

If the total fixed cost is $1,000 and the total variable cost is$15, then the total cost can be calculated by using the equation (1) as follows:

Total cost=Total fixed cost+Total variable cost=1,000+15=1,015

Thus, the value of total cost is \$1,015.

Marginal cost:

Marginal cost can be calculated by using the following formula:

Marginal cost=Total cost1Total&#

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Find more solutions based on key concepts 