Figure 5-1 -In Figure 5-1, S₁ and D Illustrate the Demand and the Demand

question 8

Multiple Choice

Figure 5-1
-In Figure 5-1, S₁ and D illustrate the demand and supply for a product if it were produced in a normal competitive market. Which of the following would be true if the firms in the industry were instead able to get government licensing restrictions to limit competition in the market?

• A) The restricted market supply would be S₃, resulting in a lower price and a higher than efficient level of output.
• B) The restricted market supply would be S₃, resulting in a higher price and a less than efficient level of output.
• C) The restricted market supply would be S₂, resulting in a lower price and a higher than efficient level of output.
• D) The restricted market supply would be S₂, resulting in a higher price and a less than efficient level of output.

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Definitions:

Soybeans

A type of legume native to East Asia, widely grown for its edible bean which has numerous uses.

Expiration Date

The specified date on which the options contract or other financial instrument becomes void and ceases to exist.

Marking-To-Market

The process of updating the value of an asset or liability to reflect its current market value rather than its book value.

Troy Ounce

A unit of measure for precious metals that is approximately 31.1035 grams, traditionally used in the pricing and trading of these commodities.