If firms in a price-taker industry were forced to install antipollution devices that increased their production costs, we should expect
A) the cost curves for the firms in this industry to shift downward.
B) the market price of the product to decrease.
C) that the firms in the industry would suffer long-run economic losses.
D) that the firms in the industry would earn normal economic profits in the long run, as the higher production costs were passed along to consumers in the form of higher prices.

Question

Quizplus · Accepted Answer

In the long run, firms in a price-taker industry will adjust to changes in production costs by passing these costs onto consumers, leading to normal economic profits as the market price increases to cover the higher costs.

If Firms in a Price-Taker Industry Were Forced to Install