Short-run marginal cost curves

Reference no: EM1370293

1. If the government imposes a $1 per-unit tax, how do the marginal, average total, and average variable costs change? What if instead the government imposes a $100 per-firm tax?

2. a) Why are short-run marginal cost curves expected to slope upward?
b) If you know that average costs are increasing, is the marginal cost curve above or below the average cost curve?
c) If you know that marginal costs are increasing, is it necessarily true that the average cost curve is below marginal cost?
d) Why does the average total cost curve always start above the marginal cost curve in the short run?
e) If marginal cost is equal to average cost, what do you know about that point on the average cost curve? Why?

Reference no: EM1370293

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