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

Question

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

Quizplus · Accepted Answer

If the entry barrier is removed, it would lead to a more competitive market where new firms can enter easily. This increased competition would shift the demand curve to the right, ultimately leading to lower prices for consumers. This would result in greater consumer surplus, making option A correct. With increased competition, firms would have to become more efficient in order to operate profitably in the market, this leads to productive efficiency being restored, making option B correct. Removing the entry barrier would also eliminate the shortage caused by the initial market structure, meaning that consumers would have access to more goods and services, making option C correct. Therefore, the correct choice is D—all of the above.

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