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Here Is The Question Related To Business And Economics

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Question 4 (13 marks)
Suppose all firms in a perfectly competitive market are initially in both short-run and long-
run equilibrium. A lump-sum tax (i.e. a tax that is unrelated to a firm’s output) is
introduced. Answer the following questions and explain.
a)
What impact will this have on (i) cost; (ii) output and (iii) operation decisions of each
firm in the short-run?
(4 marks]
la
What impact will this have on the market price in the long-run?
(3 marks)
C)
What impact will this have on each firm’s output in the long-run?
(3 marks)
d)
What impact will this have on the number of firms in the industry in the long-run?
(3 marks)Economics