The city government is considering two tax proposals: A lump-sum tax of $300 on each producer of hamburgers. A tax of $1 per burger, paid by…

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  1. The city government is considering two tax proposals:
  • A lump-sum tax of $300 on each producer of hamburgers.
  • A tax of $1 per burger, paid by producers of hamburgers.
  1. Which of the following curves—average fixed cost, average variable cost, average total cost, and marginal cost—would shift as a result of the lump-sum tax? Why? Show this in a graph. Label the graph as precisely as possible.
  2. Which of these same four curves would shift as a result of the per-burger tax? Why? Show this in a new graph. Label the graph as precisely as possible.

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