Use the Figure Below,which Shows the Linear Demand and Constant

question 16

Multiple Choice

Use the figure below,which shows the linear demand and constant cost conditions facing a firm with a high barrier to entry,to answer the question. If the entry barrier is removed consumers will be better off because

• A)consumers will enjoy greater consumer surplus.
• B)productive efficiency will be restored.
• C)competition will eliminate the shortage caused by the entry barrier.
• D)all of the above

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Definitions:

Positive Externality

A benefit that affects a party who did not choose to incur that benefit, commonly seen in situations where the activity of one entity leads to positive effects for others.

Fire Extinguishers

Safety devices used to extinguish or control small fires, often in emergency situations.

External Benefit

A positive effect on a third party or the society at large, generated by the production or consumption of a good or service.

Externalities

Costs or benefits of a market activity borne by a third party; can be negative (costs) or positive (benefits).