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AP® Microeconomics

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Moderate

Perfectly-Competitive Market: LR Impact of Tax in Carrot Market

APMICR-NV1W4K

Carrots are produced in a perfectly-competitive market that is currently in long-run equilibrium. The government decides to impose a per-unit tax on the production of carrots.

If the government continues the tax, what would be the expected long-run impact on the industry output and price?

A

Output and price would both increase.

B

Output and price would both decrease.

C

Output would increase while price would decrease.

D

Output would decrease while price would increase.

E

Output and price would remain unchanged.