If a specific (per unit)tax is implemented

Name: If a specific (per unit)tax is implemented
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A specific (per unit) tax affects both the cost and revenue side of the firm. It increases the average cost of production (A) which results in lower profits. It also causes the after-tax marginal cost curve to shift up (B) which affects the quantity produced, and ultimately lowers the profit per unit sold (C). Therefore, all of the above options are correct.

If a Specific (Per Unit)tax Is Implemented