In the Challenge Solution, would it make a difference to the analysis whether the lump-sum costs such as registration fees are
collected annually or only once when the firm starts operation? How would each of these franchise taxes affect the firm's long-run supply curve? The Federal Motor Carrier Safety Administration (FMCSA) along with state transportation agencies in 38 states administer interstate trucking licenses through a Single State Registration System. However, the registration process is complex, time consuming, and expensive. There are many fees and costly regulations that a trucker or firm must meet to operate. For example, for a large truck, the annual federal interstate registration fee can exceed $8,000. These largely lump-sum costswhich are not related to the number of miles drivenhave increased substantially in recent years. What effect do these new fixed costs have on the trucking market price and quantity? Are individual firms providing more or fewer trucking services? Does the number of firms in the market rise or fall? The Challenge Solution suggests the market price will increase and the market quantity will decrease. Further, the number of firms in the market will fall, although each firm remaining in the market will produce more. Instead of being collected annually, if the lump-sum costs are collected only once (when the firm starts operation), then
The answer is "nothing changes because the fees would still be fixed costs."
Explanation:
When annual expenses throughout the cash payment are recovered, a long-term delivery curve of both the company will change.
When the lump sum costs are still only obtained once, the long-term supply curve shall be changed.
It is because, regardless of how it is paid, this tv license has little effect mostly on low cost but only a fixed cost. Its amount of output relies on how well the cost of the profit changes. Provided these are fixed costs, their performance doesn't matter.
