A brick factory's main inputs are energy (8000 units a £10 each) and labour (4000 units at £10 each). A new environmental policy will tax energy and subsidise labour so that the firm's costs are unaffected. The Government plans a 1% tax on energy use. An adviser has suggested that a labour subsidy of 2% would leave the costs of the factory unchanged. What is wrong with this?© BrainMass Inc. brainmass.com September 21, 2018, 5:58 am ad1c9bdddf - https://brainmass.com/economics/production/cost-production-148618
For efficient level of production, we need that MPE/MPL = CE/CL. Now if the cost of the energy is increased ...
The Cost of Production is assessed. Environmental policy tax energy and subsidise labours are determined.