Consider this problem now from a short-term instead of long-term perspective. The Federal Motor Carrier Safety Administration
Question:
Consider this problem now from a short-term instead of long-term perspective.
The Federal Motor Carrier Safety Administration (FMCSA) along with state transportation agencies in 41 states (as of 2012) administer interstate trucking licenses through the United States Carrier Registration Agreement. However, the registration process is complex, time consuming, and expensive. There are many fees and costly regulations that a trucker or firm must meet to operate. For example, for a large truck, the annual federal interstate registration fee can exceed $8,000. These largely lump-sum costs-which are not related to the number of miles driven-have increased substantially in recent years.
Over the short term, what effect do these new fixed costs have on the trucking market price and quantity? Are individual firms providing more or fewer trucking services? Does the number of firms in the market rise or fall?
Assume truckers are in a perfectly competitive market that is initially in long-run equilibrium.
In the short run the market price will_____________ the market quantity will __________ each individual trucker output will ____________ and the numbers of trucker will__________ as a result of various lump-sum operations fees.
Expert Answer:
price will not change market quantity will not change individual output will not change no of tr... View the full answer
