27. Again considering a perfectly competitive industry for which property
taxes increased, the profits earned in the short run by firms
after the property tax increase will:
- be identical to those earned before the increase since they still
produce where P=MC.
- be slightly higher as firms increase price.
- be negative since production costs rose but price did not.
- be zero since price and cost will rise exactly the same amount.
- still be greater than zero, but slightly lower than before.
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