In the long run, a tax placed on a perfectly competitive industry should

Name: In the long run, a tax placed on a perfectly competitive industry should
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A tax on a perfectly competitive industry will increase the cost of production for firms, leading to lower profits. This will make some firms exit the industry, reducing the number of firms in the long run. Thus, the best choice is B, which says that the tax will decrease the number of firms.

In the Long Run, a Tax Placed on a Perfectly