Refer to the Figure above. In Panel (a), the increase in total cost of producing the original quantity of output at the new cost associated with increased environmental regulations would be A) p₂ x q₁_. B) (a + b + c). C) p₂ x q₂_. D) p₁x q₁_.

Question

Quizplus · Accepted Answer

The increase in total cost due to new environmental regulations is represented by the sum of the areas under the new cost curve but above the old cost curve, up to the original quantity of output. This is visually depicted as the areas labeled a, b, and c in the figure.

Refer to the Figure Above