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A sales tax of $1.80 per unit of output is placed on a particular firm whose product sells for $3.00 in a competitive industry with
A sales tax of $1.80 per unit of output is placed on a particular firm whose product sells for $3.00 in a competitive industry with many firms. How will this tax affect the cost curves for the firm? The firm's average total cost curve (ATC) will shift up , the firm's average variable cost curve (AVC) will shift up , and the firm's marginal cost curve (MC) will shift up What will happen to the firm's price, output, and profit? The firm's price will not change , the firm's output will decrease , and the firm's profit will decrease Will there be entry or exit in the industry? In the long run, O A. a portion of the other firms will go out of business because the long-run average cost of production will be greater than the long-run equilibrium price. O B. the taxed firm will go out of business because the firm's long-run average cost of production will be greater than the long-run equilibrium price. O C. the taxed firm will go out of business because its minimum long-run average cost of production will be lower than for other firms. O D. the taxed firm will go out of business because the long-run equilibrium price will equal the firm's minimum point on its long-run average cost curve. E. new firms will enter the market because the minimum long-run average cost of production will be higher with the tax
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