In Problem, suppose the city imposes an excise subsidy of $3 per widget. (That is, widget manufacturers
Question:
a. In the short run, what is the new price of a widget?
b. In the long run, what is the new price of a widget?
c. In the long run, how many firms enter theindustry?
Transcribed Image Text:
Industry-Wide Demand Price Firm's Marginal Cost Curve Quantity Quantity 500 400 300 200 100 50 25 10 Marginal Cost $2 $2 12 12 15 15
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a Original equilibrium is at quantity 300 New equilibrium must ...View the full answer
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