I am not quite understand the sentence in Gleim CMA part 1 SU1,1.3
Per-unit tax: this tax, e.g sales, exceise, and VAT, creates a difference between demand price (what conumers are willing to pay) and the price a firm recieves.
1) The effect is to decrease marginal revenue. The firm' s response is to lower the quantity produced by moving down the marginal cost curve.
marginal revenue=1 marginal revenue after VAT=0.8 marginal cost=1
Originally,in producing 1000th unit.the marginal revenue is 1 where the marginal cost is 1,so it is in equilibrium level.Adding the VAT into consideration drags down the marginal revenue to 0.8,that means,in producing the 1000th unit,marginal cost exceeds marginal revenue. So,to prevent this loss from being occured,firm cuts its unit output to the new equilibrium level.
The marginal costs curve tends to exhibit in J shape,which lowers in the beginning and becomes higher later.
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发表于 2008-1-7 03:50:00
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