If the cost of the negative pollution externality was added to the marginal cost of production, the true cost curve would be

Suppose a fishing boat currently brings 10,000 fish to market and earns a profit of $40,000 when the price of fish is $8 . Suppose the boat dealer had overcharged the boat owner for the boat. Upon receiving a refund of $25,000 from the dealer, what will happen to the AVC of producing 10,000 fish?

a. increases by $25 b. increases by $2.50 c. does not change d. decreases by $2.50 e. decreases by $25

A. firms are worried that frequent price changes would annoy consumers. B. most firms have agreements with each other to fix prices at profit-maximizing levels. C. government controls most prices. D. foreign competition discourages domestic firms

from price changes. A. Government regulations limit the number of times a firm can change prices in a year. B. In most industries the profit-maximizing price does not change even when demand changes. C. Production costs do not tend to change when a firm varies its level of output. D. Firms may be reluctant to change prices for fear of setting off a price war or losing customers to rivals.