Question

If a unit tax is imposed, how does it impact the short _run supply curve of
a firm ? Show with the help of diagram​

Answer 1

Answer:

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Explanation:

The firm's output falls from q1 to q2, and the impact of the tax is to shift the firm's short-run supply curveupward, (ii) If the tax is greater than thefirm's profit margin, then the AVC will rise, and if the minimum AVC is greater than the market price, the firm will choose not to produce.

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