Cost curves, graphically (8 points). GLS Ch 7, P10. Daniel’s Midland Archers (DMA) makes children’s...

Question

Cost curves, graphically (8 points). GLS Ch 7, P10. Daniel’s Midland Archers (DMA) makes children’s wooden practice arrows. Draw a set of representative short-run cost curves for DMA. Include average variable cost, average fixed cost, average total cost, and marginal cost. Assume marginal cost is increasing and average variable cost starts above marginal cost. (a) (4 points) Suppose that Congress imposes a 39-cent excise tax on each children’s wooden practice arrow DMA sells. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not? (b) (4 points) Suppose that the city where DMA produces arrows increases the annual property tax on DMA’s factory from $80,000 to $150,000. Illustrate the effects of this tax on the cost curves of DMA. Which curves shift and which do not? (Assume there is no tax from part (a).)

David · Accepted Answer

Cost curves, graphically (8 points). GLS Ch 7, P10. Daniel’s Midland Archers (DMA) makes children’s 
wooden practice arrows. Draw a set of representative short-run cost curves for DMA. Include average 
variable cost, average fixed cost, average total cost, and marginal cost.

Cost curves, graphically (8 points). GLS Ch 7, P10. Daniel’s Midland Archers (DMA) makes children’s wooden practice arrows. Draw a set of representative short-run cost curves for DMA. Include average...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment