Long-Run Firm Adjustment to a Per-Unit Tax
In a competitive market as illustrated by the graph, which long‐run adjustment might firms adopt in response to a per‐unit tax to mitigate its adverse effects?
A
They would lower product quality to reduce production expenses.
B
They would increase wages to attract more workers.
C
They may adopt cost‐reducing technologies to lower marginal costs.
D
They would expand advertising to boost product demand.
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