If social regulation increases a firm's fixed and variable costs:
A)then both marginal cost and average total cost will increase,and the firm will produce more.
B)then both marginal cost and avetage total cost will increase,and the firm will produce less.
C)then both marginal cost and average total cost will decrease,and profits will increase.
D)Marginal cost will increase,average total cost will be constant,and price will decline.
E)both price and quantity produced will fall.

Question

Quizplus · Accepted Answer

If social regulation increases a firm's fixed and variable costs, both marginal cost and average total cost will increase. This will cause the firm to produce less because it will become more expensive to produce the same quantity of output. Consequently, the optimal level of output will decrease, resulting in a lower quantity produced.

If Social Regulation Increases a Firm's Fixed and Variable Costs