Assume that _izmos are roduced in a perfectly competitive, constantcost industry. It is currently in a Crop one question at a time a price of $40 per unit. Each of the 25 identical rms produces 20 Suppose that in response to the public demand for environmental protection, the government requires all firms in this industry to reduce their carbon dioxide emissions. As a result, the firms mu st make a once andfona investment in a ltering system. For simplicity, it is assumed that firms incur no additional costs to use the ltering system. a) How does this regulatory change affect the production decision of a rm in the short run? Illustrate your answers in a pair of diagrams (one for the market and the other for the rm). Show clearly the changes in (i) the industry output, (ii) the quantity supplied by each rm, and (iii) the economic prot or loss of a rm. b) Illustrate a new long-run equilibrium in a pair of diagrams. Relative to the initial long-run equilibrium, what will happen to (i) the price ofthe product, (ii) the industry output, (iii) the quantity supplied by each rm, (iv) the number of the rms in this industry. c) Will consumers pay part of the cost of the filtering system in the long run? Explain