In a competitive market with a downward sloping demand curve, a tax that increases the fixed cost of every firm will:
a) reduce the number of firms supporting long run equilibrium
b) increase the long-run equilibrium price.
c) not cause the number of firms supporting long-run equilibrium to change
d) answers a and b
e) answers b and c© BrainMass Inc. brainmass.com March 4, 2021, 5:57 pm ad1c9bdddf
The correct answer is (d). If a tax is imposed which increases the fixed ...