If a government implements a lump-sum tax, what is the most likely effect on a firm's production decisions?

A lump-sum tax is a fixed amount that a firm must pay to the government, regardless of how much it produces or sells. Since this tax does not change based on the firm's level of output, it does not directly affect the marginal cost of producing goods. As a result, firms may not alter their production decisions based solely on this tax, since their costs remain constant in relation to production levels. For example, if a factory pays a lump-sum tax of $1,000, it will still produce the same number of widgets if the profit from selling them remains higher than the costs of production. Therefore, the firm will continue to make decisions based on demand and production costs rather than the lump-sum tax itself.