Figure 12-15 -Refer to Figure 12-15.Suppose a Typical Firm in a Perfectly

question 179

Multiple Choice

Figure 12-15

-Refer to Figure 12-15.Suppose a typical firm in a perfectly competitive market is earning economic profits in the short run.Which of the diagrams in the figure depicts what happens in the industry as it transitions to a long-run equilibrium?

• A)Panel A
• B)Panel B
• C)Panel C
• D)Panel D

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Definitions:

Tax Incidence

An examination of the distribution of tax burdens, including who ultimately pays the tax (consumers or producers) and how it affects market equilibrium.

Suppliers

Entities or individuals that provide goods or services to another entity, typically for resale, use, or consumption.

Tax Rate

The rate at which taxes are applied to a person or a company's income.

Per Unit

A term used to describe the measurement or pricing of something in individual units or on a per-item basis.