Answer to Question #229259 in Economics for Jennifer Masanabo

Question

Explain the implication that would be on quantity produced if the same environmental regulations were made effective on two firms, one with an inelastic demand curve and the other with an elastic demand curve.

Answer 1

If the same environmental standards were adopted for two firms, then the firm whose demand is represented by an inelastic demand curve will reduce output. And the other - with an elastic demand curve, on the contrary, will increase output.