Refer to the Figure above. Panel (a) and Panel (b) represent industries that have experienced cost increases due to environmental regulations. Assume that both price increases are equivalent. Which panel reflects less impact on the consumer and a large industry adjustment, in terms of less output?

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Panel (b) reflects a smaller increase in quantity demanded in response to the same price increase, indicating that consumers are less sensitive to price changes in this industry. This means that the industry has a larger adjustment and can reduce output more without losing as many customers. Therefore, Panel (b) reflects less impact on the consumer and a larger industry adjustment.

Refer to the Figure Above