If a City Decides to Restrict the Number of Pizza

question 128

Multiple Choice

If a city decides to restrict the number of pizza parlors,

• A) the price of pizza will increase.
• B) pizza parlors will make higher profits.
• C) total welfare will decrease.
• D) All of the above.

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Definitions:

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, often used for hedging or speculating on the future price of financial instruments.

Forward Contract

A forward contract is a non-standardized agreement between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Listed Put Option

A put option that is traded on a registered exchange, where the holder has the right to sell a specified quantity of an asset at a set price before the option expires.

Cash

Liquid assets that are readily available for immediate use in transactions or to cover short-term liabilities.