Suppose license fees for building contractors double in the state of California. A license fee must be paid to the state each year before the contactor is allowed to work. Assuming the market is perfectly competitive what effect will this fee increase have?

A. On the number of firms operating and why

B. On the market price and why

C. On the amount of output produced and why

Answer rating: 100% (QA)

A Number of firms operating will decrease because it will increase the ATC an... View the full answer