Final answer:
The equilibrium price will not change if a quota is set above the current level of imports. Various scenarios like environmental fines and cleanup requirements typically cause the market supply curve to shift left (decrease) and raise equilibrium prices, whereas lack of regulation would not affect the supply curve or prices. Therefore correct option is C
Step-by-step explanation:
If a quota is set at a level higher than the current level of imports, the resulting equilibrium price paid by consumers in the imported softwood lumber market will not change. This is because the quota does not restrict the amount of goods that can come into the market below the current import level, there is no new pressure on the price mechanism in the marketplace. As for how various scenarios affect market supply curves and equilibrium prices:
- Firms required to pay a fine for carbon emissions: Market supply curve would shift to the left (decrease), leading to a rise in equilibrium price.
- Companies sued for polluting water: Market supply curve would likely shift to the left due to potential costs associated with legal issues and clean-up, leading to a rise in equilibrium price.
- Power plants not required to address air quality emissions: Market supply curve would stay the same, and equilibrium price would not change.
- Companies required to clean up after fracking: Market supply curve would shift to the left (increase in production costs), leading to a rise in equilibrium price.
Also, a price floor set above the equilibrium price will not shift the demand or supply curve; instead, it creates a surplus by fixing the price above the market equilibrium.