Asked by Bailey Hasler on May 18, 2024
Verified
Suppose the state legislature in your state imposes a state licensing fee of $100 per year to be paid by all firms that file state tax revenue reports. This new business tax:
A) increases marginal cost.
B) decreases marginal cost.
C) increases marginal revenue.
D) decreases marginal revenue.
E) none of the above
State Licensing Fee
A mandatory charge paid to a state government for the issuance of a license to conduct a particular business or profession within that state's jurisdiction.
Marginal Cost
The escalation in aggregate cost stemming from the production of one more unit of a good or service.
Business Tax
Taxes imposed on the income or profit of businesses, varies by country and the type of business.
- Analyze the impact of external factors, such as taxes and changes in market price, on firm behavior.
Verified Answer
JA
Jassy ArantonMay 23, 2024
Final Answer :
E
Explanation :
The $100 fee is a fixed cost, not related to the production level or sales of a firm, so it does not affect marginal cost or marginal revenue, which are concerned with the cost and revenue of producing one more unit of a good or service.
Learning Objectives
- Analyze the impact of external factors, such as taxes and changes in market price, on firm behavior.