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:
  1. be identical to those earned before the increase since they still produce where P=MC.
  2. be slightly higher as firms increase price.
  3. be negative since production costs rose but price did not.
  4. be zero since price and cost will rise exactly the same amount.
  5. still be greater than zero, but slightly lower than before.

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