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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Definitions:

Capacity Allocation

Involves the strategic distribution of resources and workloads across production or service delivery systems to optimize output and efficiency.

Facility Location

Involves determining the most optimal placement for a firm's manufacturing or distribution facilities to minimize costs and maximize service quality.

Facility Location Decisions

The process of determining the most suitable locations for production or service facilities based on factors such as cost, access to markets, and logistics.

Tariffs

Taxes or duties imposed on imported or, less commonly, exported goods to control trade flows or raise government revenue.