Answer to Question #144303 in Microeconomics for Liam

Question

Suppose the firms in a competitive industry face pandemic safety costs that take the form of $S per period. In the short run this leads to an increase in market prices in this industry.

Answer 1

True. The input cost will increase because of increased safety costs. As a result, the supply curve would shift to the left. Therefore, due to a decrease in supply, the price of the output will increase.