Assume in a Competitive Market That Price Is Initially Above

question 116

Multiple Choice

Assume in a competitive market that price is initially above the equilibrium level. We can predict that price will

• A) decrease, quantity demanded will decrease, and quantity supplied will increase.
• B) decrease and quantity demanded and quantity supplied will both decrease.
• C) decrease, quantity demanded will increase, and quantity supplied will decrease.
• D) increase, quantity demanded will decrease, and quantity supplied will increase.

Understand the concept of barriers to entry and its impact on market structures.

Assess the role of public ownership and regulation in controlling monopoly power and protecting welfare.

Analyze the reasons why governments may choose not to intervene in monopoly markets.

Distinguish between the short-run and long-run behaviors of monopolies compared to competitive firms.

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Definitions:

Shareholder

An individual or entity that owns shares in a company, giving them a claim on part of its assets and earnings.

Pre-emptive Rights

Rights that allow existing shareholders to purchase additional shares in a company before new shares are offered to the public, to maintain their proportional ownership.

Shareholder's Agreement

A contract among the shareholders of a company outlining their rights, responsibilities, and obligations.

Voting Rights

The entitlement of individuals to participate in the election of government officials and to have their vote counted.