[Solved] Suppose Your Trucking Firm in a Perfectly Competitive Industry Is
Question 88
Multiple Choice
Question 88Suppose your trucking firm in a perfectly competitive industry is making zero economic profits in the short run.The federal government imposes a new safety regulation that affects all firms,thus shifting the marginal cost curve upward.As a result your firm's profit maximizing short-run output will
A)decrease because the new MC curve will intersect the horizontal demand curve at a lower rate of output.
B)remain the same because you will pass on the extra costs to the consumers.
C)remain the same since the new regulation does not affect ATC.
D)increase as firms will leave the industry at the higher costs,thus driving up the market price.
E)increase as price rises in the long run.
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FIGURE 9-1
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E)P5. - Q84: FIGURE 9-1
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