The Clean Air Act and its amendments increase the production costs of the firms in a covered industry through increased:
A) fixed costs while marginal cost is unchanged.
B) marginal cost while fixed costs remain the same.
C) fixed costs and increased marginal costs.
D) average cost while marginal cost is unchanged.

Question

Quizplus · Accepted Answer

The Clean Air Act and its amendments typically require firms to invest in pollution control technologies or processes, which increases both fixed costs (due to the investment in equipment or modifications) and marginal costs (due to the ongoing costs associated with operating the pollution control technologies).

The Clean Air Act and Its Amendments Increase the Production