Given That Energy Is an Input in Production, the Development

question 29

Multiple Choice

Given that energy is an input in production, the development of a cheaper source of energy will result in:

• A)a lower price level and a lower amount of production.
• B)a higher price level and a higher amount of production.
• C)a lower amount of production at every price level.
• D)a higher amount of production at every price level.
• E)a lower profit at every price level.

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Definitions:

Cartel

An association of manufacturers or suppliers with the purpose of maintaining high prices and restricting competition.

Differentiated Product

A product that is distinguished from similar products offered by competitors because of unique characteristics or features.

Homogeneous Product

A product that is identical or almost identical in features, functions, and quality across different suppliers.

Equilibrium Price

The price at which the quantity of a product offered for sale matches the quantity that consumers are willing to buy, without any leftover surplus or shortage.