In the above figure, a regulation requiring average cost pricing would force the firm to produce at output level

Identify two kinds of circumstances which may favor nonneutral taxes

What will be an ideal response?

Economics: a. is a natural science like biology and chemistry

b. is a science built on survey data and declared preferences (what people say they are going to do) not on revealed preferences (how people actually behave). c. is a science concerned with reaching generalizations about human behavior, not unlike sociology or psychology. d. is concerned with predicting business conditions in the future, not with the current state of the stock market.