Suppose a Market Is Initially Perfectly Competitive with Many Firms

question 177

Multiple Choice

Suppose a market is initially perfectly 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:

GDP Per Person

Economic metric that divides a country's gross domestic product by its total population, indicating average income or economic output per person.

United States

A country in North America consisting of 50 states and a federal district, known for its significant influence on worldwide cultural and economic affairs.

Canada

A country in North America known for its vast landscapes, multicultural population, and as a member of the Commonwealth with a parliamentary democracy.

World System Theory

A sociological theory focusing on the global economic system as a complex structure influencing countries’ development and interactions through capital and trade.