Suppose a Manufacturing Firm That Is About to Be Regulated

question 9

Multiple Choice

Suppose a manufacturing firm that is about to be regulated faces the following actual and potential production costs: 1) $4,000 before regulation; 2) $4,550 in the future without the regulation; and 3) $5,200 in the future with the regulation. The true cost of the proposed regulation, invoking the with/without principle, is ________.

• A) $550
• B) $1,200
• C) $650
• D) impossible to determine from the information provided

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