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e Your boss says “either oi these taxes is going to torce us to change our production levels.” Given what vou know about optimization analvsis,...

This question was created from Assignment 4-FA17 AP2.docx


Use same table from question 2 and respond to the following: Your boss says "either of these taxes is going to force us to change our production levels." Given what you know about optimization analysis, how would you respond? Select one: a. Optimization depends partly on marginal cost but also on marginal benefit. The property tax does not affect MC but does affect MB, so it could change the optimal Q. The per-unit tax affects MC and MB equally, so it would not change the optimal Q. b. Since both taxes alter the cost curves (in different ways), they both necessarily alter the optimal Q for the company. c. Optimization depends partly on marginal cost, which is not affected by the property tax, though it is by the per-unit tax. The property tax won't change the optimal Q but the per-unit tax may change the optimal Q. d. Since neither tax is a true "cost" of production (they are unlike paying salaries or buying raw materials), then it is impossible to say whether the optimal Q is affected.


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