Marginal Cost Structure

label Economics
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Are there changes in the marginal cost structure if there is a reduction in output resulting from the property tax increase?

May 5th, 2015

Marginal cost is the cost of producing an extra unit and is a function of variable cost. 

In this case, increase in property tax results into reduced output. If the production output is within the present capacity of the fixed assets (property - land, factory, machines), property tax will be considered a fixed asset.

Hence there will be NO changes in the marginal cost. 


May 5th, 2015

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May 5th, 2015
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