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Question
New safety regulations increase manufacturers' costs of producing insulation. What happens in the market for insulation?a. The demand falls as buyers refuse to bear the higher production costs.
b. The supply falls, resulting in a higher equilibrium price and lower equilibrium quantity.
c. Both supply and demand fall, resulting in less insulation being bought and sold.
d. The supply rises as manufacturers attempt to use higher sales to offset their lower profit margins.
Answer
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