If Price-Taking Firms Are Required to Install Wet Scrubbers on Their

question 57

Multiple Choice

If price-taking firms are required to install wet scrubbers on their chimneys to meet EPA regulations and their costs increase as a result, we would expect

• A)demand for the product to fall
• B)the market supply curve to shift to the left
• C)the long-run economic profit of individual firms in the industry to fall
• D)the short-run economic profit of individual firms in the industry to remain unchanged
• E)short-run profits to rise as the industry raises price more than the cost of pollution

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