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

question 165

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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