SELECT * FROM question_mgmt as q WHERE id=5559 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=60 AND chapterId=611 and ex_no='1' AND status=1 ORDER BY CAST(question_no AS UNSIGNED) CBSE Free NCERT Solution of 12th micro-economics The Theory of the Firm under Perfect Competition how does the imposition of a unit tax affect the s

Question:

How does the imposition of a unit tax affect the supply curve of a firm?

Answer:

A unit tax is the tax imposed on per unit of the output sold. Due to the imposition of unit tax, the cost of production per unit of output increases, which ultimately increases the marginal cost. Consequently, the LMC curve will shift leftward upward and as the supply curve is a portion of LMC, so the supply curve will also shift leftward upward. Let us understand the effect of imposition of unit tax through an example. Suppose that a firm is facing the price OP1. LAC1 and LMC1 are the long run average cost curve and long run marginal cost curve respectively. Also assume that the government has imposed a unit tax of Rs k per unit of output produced. Now, this will rise the firm's LAC and LMC, as the firm needs to pay Rs k extra on each output produced. Consequently, LMC1 and LAC1 will shift leftward upwards to LMC2n and LAC2. The magnitude of shift is equal to Rs k. As the supply curve is a part of LMC, it will also shift leftward from S1 to S2 , due to the imposition of the tax. Consequently, the firm will now supply lesser units of output.


< Previous Question

Next Question >

SELECT ex_no,question,question_no,id,chapter FROM question_mgmt as q WHERE courseId='3' AND subId='60' AND ex_no!=0 AND status=1 and id!=5559 ORDER BY views desc, last_viewed_on desc limit 0,10

  • Popular questions of class 12 Micro Economics

SELECT ex_no,question,question_no,id,chapter FROM question_mgmt as q WHERE courseId='3' AND subId='60' AND ex_no!=0 AND status=1 and id!=5559 ORDER BY last_viewed_on desc limit 0,10

  • Recently Viewed Questions of Class 12 Micro Economics

Comments

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

  • Answered by Ekta Mehta
  • 4 months ago

Taking Screenshots on your Samsung Galaxy M31s is very easy and quick.

Comment(s) on this Question


NCERT Solutions

Quick Links

Resources

Support