Suppose Antitheft Auto Alarms Are Produced in a Price-Taker Market

question 93

Multiple Choice

Suppose antitheft auto alarms are produced in a price-taker market that is initially in long-run equilibrium. It is estimated that only 23 percent of all autos have alarms. Due to rising auto theft, Congress mandates alarms in every vehicle. Assume complete compliance. If the industry is an increasing cost industry, price will

• A) increase in both the short run and long run.
• B) decrease in both the short run and long run.
• C) increase in the short run but not in the long run.
• D) decrease in the short run but not in the long run.

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Definitions:

Hidden Environmental Cost

The indirect environmental impact and expenses not immediately apparent or accounted for in the pricing of goods and services.

Oil-Spill Clean Up

Oil-spill clean up involves the methods and technologies used to remove or mitigate the effects of oil spills in the environment, focusing on preserving marine and coastal ecosystems.

Product Disposal

The process of discarding, recycling, or destroying products that are no longer useful or necessary.

Environmental Management Accounting

A management approach focused on assessing, managing, and reporting environmental costs and benefits to enhance environmental sustainability and economic performance.