Suppose a Market Is Initially Competitive with Many Firms Selling

question 5

Multiple Choice

Suppose a market is initially competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

• A) an increase in market output and an increase in the price of the product.
• B) an increase in market output and an decrease in the price of the product.
• C) a decrease in market output and an increase in the price of the product.
• D) a decrease in market output and a decrease in the price of the product.

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Definitions:

Vote-Seeking Politicians

Politicians who prioritize actions and policies that are likely to appeal to voters, aiming to secure electoral success.

General Welfare

The overall health, prosperity, and contentment of a community or nation, often considered a government's primary goal.

Private Producers

Individuals or companies that produce goods or services in an economy that are not owned by the state.

Taxpayer

An individual or entity that is obligated to make payments to a governmental authority, usually in the form of taxes on income, property, or purchases.