Refer to the figure above. When the demand curve for gas is D2 and the supply curve for gas is S, the surplus in the market when price is $8 is:

Income taxes create a wedge between the wage rate paid by ________ and received by workers and thereby ________ employment and ________ potential GDP

A) firms; raise; decrease B) households; lower; decrease C) firms; lower; decrease D) firms; lower; increase E) firms; raise; increase

In a perfectly competitive industry, economic profit

A. Can persist in the long run because of homogeneous products. B. Will always be negative in the long run because of ease of entry. C. Can persist in the long run because of barriers to entry. D. Will approach zero in the long run as more firms enter the market.