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#14 Long-Run Equilibrium - Competitive markets

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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

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The correct answer is (d). If a tax is imposed which increases the fixed ...