Suppose That Newspaper Companies Are Now Required to Use Recycled

question 116

Multiple Choice

Suppose that newspaper companies are now required to use recycled paper, which is more expensive than new paper. Which of the following is most likely to result if the newspaper industry is highly competitive?

• A) The firms' costs rise, resulting in positive economic profit in the short run and, hence, the industry supply curve shifts rightward in the long run.
• B) The firms' costs rise, resulting in economic losses in the short run and, hence, the industry supply curve shifts rightward in the long run.
• C) The firms' costs rise, resulting in economic losses in the short run and, hence, the industry supply curve shifts leftward in the long run.
• D) The industry supply curve shifts leftward in the short run, causing permanent long-run economic losses.

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Definitions:

Fair Value

Fair value is the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Non-Controlling Interest

The portion of equity in a subsidiary not attributable, directly or indirectly, to the parent company.

Price Per Share

The amount of money that buying one share of a company's stock will cost.

Social Media Users

Individuals who use online platforms and websites to create, share, or exchange information, ideas, pictures/videos, and develop social networks.