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

question 38

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:

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