You have collected the following data on output and total variable costs:
Qb TVC ($)
4 . 177
5 . 198
6 . 218
7 . 243
8 . 279
9 . 330
10 . 400
Current fixed costs for the company equal $230. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and the other shows AVC
AC, and MC. Suppose that the government imposes a $65 property tax hike on all businesses; how will that affect your two graphs; i.e., which cost curves will be affected and how?
a. The property tax will shift up TC by $65 and AC by $65/Q (i.e., $65 divided by Q)
b. TC and AC will both shift up by $65/Q (i.e., $65 divided by Q
c. MC will shift up by the amount of the tax (i.e., by $65).
d. TC will shift up by $65 while AC and MC will shift down by $65/Q . (i.e., $65 divided by Q)