One Way to Improve the Social Welfare of a Society

question 32

Multiple Choice

One way to improve the social welfare of a society is to ________ competition and ________ monopoly practices through policy legislation.

• A) limit; encourage
• B) limit; limit
• C) encourage; limit
• D) ban; subsidize
• E) encourage; subsidize

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Definitions:

Perfectly Elastic

Describes a situation where the quantity demanded or supplied of a product responds infinitely to even the smallest change in price.

Inelastic

Refers to a situation where the demand or supply of a good or service is relatively unresponsive to changes in price.

Price Effect

The impact on consumer demand and supply of goods caused by changes in the price of a product or service.

Quantity Effect

The impact on the total quantity bought or sold in a market as a result of changes in price.