Suppose in solved problem 72 that the government charges


Suppose in Solved Problem 7.2 that the government charges the firm a franchise tax each year (instead of only once). Describe the effect of this tax on the marginal cost, average variable cost, short-run average cost, and long-run average cost curves.

Problem 7.2

Carmen bought a $125 ticket to attend the Outside Lands Music & Arts Festival in San Francisco. Because it stars several of her favorite rock groups, she would have been willing to pay up to $200 to attend the festival. However, her friend Bessie invites Carmen to go with her to the Monterey Bay Aquarium on the same day. That trip would cost $50, but she would be willing to pay up to $100. What is her opportunity cost of going to the aquarium?

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Econometrics: Suppose in solved problem 72 that the government charges
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