Suppose the Government Increases the Annual Cost of the Liquor

Multiple Choice

Suppose the government increases the annual cost of the liquor permit that a tavern needs to serve alcohol.What effect will this increased cost have on the tavern's production and pricing decisions?

A) None-the tavern will maintain its current prices.
B) The tavern will raise its prices to cover the higher cost.
C) The tavern will scale back its operations.
D) The tavern will cut its prices to increase its sales.