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(g) The government imposes a per-unit tax on the production of knowledgium. Which of the seven cost curve(s) would be affected

User Itkevin
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Final answer:

The imposition of a per-unit tax on knowledgium production affects the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) by shifting these cost curves upward, representing increased production costs.

Step-by-step explanation:

When the government imposes a per-unit tax on the production of a good, like knowledgium, it increases the costs incurred by producers. This additional cost affects the company's cost curves, which are graphical representations of the costs related to the production of goods. Specifically, a per-unit tax affects the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves by shifting them upward.

The reason behind this is that taxes are considered an additional cost of production. Thus, for each unit produced, the producer now has to pay not only the original cost of production but also the tax. This increase in cost means that at each level of output, the cost is now higher than it was before the imposition of the tax. Graphically, the MC, ATC, and AVC curves shift upward by the amount of the tax.

It is important to note that the fixed costs (FC) and the average fixed cost (AFC) are not affected because these costs do not vary with the level of production and are incurred even if the output is zero.

User Jeremy Rosenberg
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