Understanding Taxes: Lump Sum vs. Per Unit

What is the primary effect of a lump sum tax on a firm's costs?

• It decreases the variable costs.

• It increases the fixed costs.

• It decreases the average total cost.

• It increases the marginal cost.

How does a lump sum tax impact the price and quantity of goods produced?

• Price and quantity remain the same.

• Price decreases, quantity increases.

• Price increases, quantity decreases.

• Price increases, quantity remains the same.

What is the effect of a per unit tax on a firm's marginal cost?

• It becomes zero.

• It increases.

• It decreases.

• It remains unchanged.

How does a per unit tax affect the price and quantity of goods produced?

• Price and quantity remain the same.

• Price decreases, quantity increases.

• Price increases, quantity decreases.

• Price decreases, quantity remains the same.

Which type of tax affects the marginal cost of production?

• Lump sum tax

• Both lump sum and per unit taxes

• Per unit tax

• Neither lump sum nor per unit taxes