Increase in the monthly fire insurance premium

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Reference no: EM131098951

Suppose there is an increase in the monthly fire insurance premium that department stores have to pay. Assume that department stores are a competitive industry.

A. In the short-run, will the prices of goods sold at department stores increase or remain unchanged? (Explain your answer using cost curves for the individual firm, and supply and demand curves for the industry.)

B. In the long-run, how will the prices of goods sold at department stores change? (Explain your answer using cost curves for the individual firm, and supply and demand curves for the industry.)

Reference no: EM131098951

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