Suppose a $1 Tax Is Levied on Each Unit of Output

question 44

Multiple Choice

Suppose a $1 tax is levied on each unit of output in a perfectly competitive industry, we know that:

• A)the number of firms in the industry will increase in the long run as long as the demand curve is downward sloping.
• B)the number of firms in the industry will decrease in the long run as long as the demand curve is downward sloping.
• C)firms will no longer produce at the bottom of the average cost curve in long run equilibrium.
• D)firms will no longer produce at the top of the average cost curve in long run equilibrium.

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Definitions:

Visual Signals

Information conveyed through visible signs or gestures, often essential for communication in animals, including humans.

Auditory Signals

Sounds that are detected by the ear and interpreted by the brain, important for communication and environmental awareness.

Natural Selection

The process by which biological traits become either more or less common in a population as a function of the effect of inherited traits on the differential reproductive success of organisms interacting with their environment.

Group Living

The phenomenon where individuals of a species live closely together in communities or social groups for mutual benefit.