Costs of Regulation. Glove-Box, Inc., produces glove boxes designed to allow workers to safely handle hazardous materials used in a wide variety of products. Market demand and marginal revenue relations for the Glove-Box units are:
Assume the Occupational Health and Safety Administration (OSHA) has recently ruled that Glove-Box must install expensive new shielding equipment to further guard against worker injuries. This will increase the $200,000 marginal cost of manufacturing by $250,000 per unit. Glove-Box's fixed expenses of $50 million per year, which include a required return on investment, will be unaffected.

Question

Costs of Regulation. Glove-Box, Inc., produces glove boxes designed to allow workers to safely handle hazardous materials used in a wide variety of products. Market demand and marginal revenue relations for the Glove-Box units are:
  Assume the Occupational Health and Safety Administration (OSHA) has recently ruled that Glove-Box must install expensive new shielding equipment to further guard against worker injuries. This will increase the $200,000 marginal cost of manufacturing by $250,000 per unit. Glove-Box's fixed expenses of $50 million per year, which include a required return on investment, will be unaffected.

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The Answer of Costs of Regulation. Glove-Box, Inc., produces glove boxes designed to allow workers to safely handle hazardous materials used in a wide variety of products. Market demand and marginal revenue relations for the Glove-Box units are:
  Assume the Occupational Health and Safety Administration (OSHA) has recently ruled that Glove-Box must install expensive new shielding equipment to further guard against worker injuries. This will increase the $200,000 marginal cost of manufacturing by $250,000 per unit. Glove-Box's fixed expenses of $50 million per year, which include a required return on investment, will be unaffected.