Suppose a wallet firm has been dumping its wastes into the local river. The government finds out and insists that the firm pay for the cost of the river cleanup. As a result, we can expect:
A) more wallets to be produced at a lower price.
B) more wallets to be produced at a higher price.
C) fewer wallets to be produced at a lower price.
D) fewer wallets to be produced at a higher price.
E) the same number of wallets to be produced at a higher price.

Question

Quizplus · Accepted Answer

The cost of the river cleanup will increase the firm's expenses, which will decrease their profits. Consequently, the firm will likely reduce their production and raise their prices to maintain their profitability. This would result in fewer wallets being produced at a higher price.

Suppose a Wallet Firm Has Been Dumping Its Wastes into the Local