Consider a set of polluting firms all subject to a new environmental regulation. It is determined that the incidence of this regulation is entirely forward and not backward. That means that the entire cost of the regulation is passed on to consumers.

Select one:

True

False

Which of the following results in an increase in the standard of living? a. an increase in unemployment pushes down the cost of production. b. wages go up to correct for the inflation of prices. c. income increases, enabling consumers to buy more goods and services. d. rising production costs drive up the price of goods and services.