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Marginal cost is the cost to the firm of producing one more unit of output - it is affected by the same factors that affect variable costs. A lump sum tax does not affect this relationship whereas a tax on the marginal unit produced will; such as an ad valorem tax.
If a lump sum tax is imposed on a producer this will NOT affect his profit maximising decisions as his output decisions are always based on the margin. He will set MC = MR as per normal but will endure lower profits as the AC has increased.
It is important to understand the distinction between marginal and average in this case and the consequences that marginal tax has on behaviour of the firm.
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Marginal versus variable costing?
Variable cost refers to the TOTAL variable cost of all units, whereas marginal cost is the variable cost of the last unit only. Variable cost is the sum of all the individual marginal costs. The derivative of the Variable Cost is the Marginal Cost. The integral of the Marginal cost is the Variable Cost.
What is the relationship between marginal cost and total cost in the production process?
Marginal cost is the additional cost incurred by producing one more unit of a good or service. It is calculated by dividing the change in total cost by the change in quantity produced. Total cost, on the other hand, is the sum of all costs incurred in producing a certain quantity of goods or services. The relationship between marginal cost and total cost is that marginal cost affects the total cost by showing how much the cost increases when producing additional units. When marginal cost is less than average total cost, total cost decreases. When marginal cost is greater than average total cost, total cost increases.
What will an increase in taxes on consumers most likely cause?
This depends on what type of tax it is, lump sum or marginal.Lump sum: a lump sum consumption tax would not affect the general level or composition of consumption because fixed quantities do not affect optimal consumption-savings decisions.Marginal tax: if the marginal tax increased (i.e.) a general sales tax increase), it would decrease overall consumption because the tax would be an increase in the cost of consuming, and thus encourage the consumer to save more money and consume less.
Social cost benefit analysis?
Summary Social cost/benefit: sum of all private costs/benefit. Social welfare analysis: involves optimising social outcomes based on cost/benefit. Optimal occurs: where marginal social cost (MSC) = marginal social benefit (MSB) Is used for: cost of economic choices, policies, initiatives, etc. Longer Explanation Social cost-benefit analysis is also known as 'welfare analysis' and is very similar to normal firm optimisation models. Essentially, social cost and benefit usually involve a private producer or consumer and a public provider or public demand. In these cases, the private cost/benefit of the private actor differs from the social cost/benefit. A social cost/benefit is simply the sum of all costs and benefits of all private actors. Cost is represented on a cost-quantity axis as a positively-sloped function (linear or higher power) and benefit is a negatively-sloped function. Their optimisation occurs where the derivatives of cost and benefit (marginal social cost; marginal social benefit) are equal. This point is where profit/social welfare is greatest.
What impact does a lump sum subsidy have on a monopoly's market power and pricing behavior?
A lump sum subsidy reduces a monopoly's costs, increasing its market power and potentially allowing it to lower prices to attract more customers.
Marginal versus variable costing?
Variable cost refers to the TOTAL variable cost of all units, whereas marginal cost is the variable cost of the last unit only. Variable cost is the sum of all the individual marginal costs. The derivative of the Variable Cost is the Marginal Cost. The integral of the Marginal cost is the Variable Cost.
How much tax will you pay on 60000.00 lump sum?
If your marginal tax rate is 35% the amount of federal income tax would be 21000.
Lump Sum Future Value Calculator?
Lump Sum Future Value Calculator Use this calculator to determine the future value of a lump sum.
What is the relationship between marginal cost and total cost in the production process?
Marginal cost is the additional cost incurred by producing one more unit of a good or service. It is calculated by dividing the change in total cost by the change in quantity produced. Total cost, on the other hand, is the sum of all costs incurred in producing a certain quantity of goods or services. The relationship between marginal cost and total cost is that marginal cost affects the total cost by showing how much the cost increases when producing additional units. When marginal cost is less than average total cost, total cost decreases. When marginal cost is greater than average total cost, total cost increases.
Lump Sum Present Value Calculator?
Lump Sum Present Value Calculator Use this calculator to determine the present value of a future lump sum.
How much does a minecraft account cost per month?
it does not cost per month you pay in one lump sum up front.
What will an increase in taxes on consumers most likely cause?
This depends on what type of tax it is, lump sum or marginal.Lump sum: a lump sum consumption tax would not affect the general level or composition of consumption because fixed quantities do not affect optimal consumption-savings decisions.Marginal tax: if the marginal tax increased (i.e.) a general sales tax increase), it would decrease overall consumption because the tax would be an increase in the cost of consuming, and thus encourage the consumer to save more money and consume less.
What are the types of bill quantities?
The two main types of bill quantities are lump sum and itemized. Lump sum bills provide a single total cost for a project, while itemized bills break down costs by individual items or services.
What does it mean to get a lump sum payout?
To get a lump sum payout typically involves foregoing monthly installment payments in lieu of a one time lump sum. Many people who win the lottery prefer to have a lump sum taken instead of monthly checks. Although it should be noted the lump sum is less money than if you were to add up all monthly payments, in the long run.
Lump Sum Annual Rate of Return Calculator?
Lump Sum Annual Rate of Return Calculator Use this calculator to determine the annual rate of return of known lump sum starting and ending amount.
Relationship between total and marginal product?
Total product is the sum of all marginal products.
How can one perform lump sum payments?
Many contracts will offer different payment offers such as a large amount of money that can be deposited at the beginning or smaller payments that are distributed over time which usually cost more than lump sum payments.
