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?

Question

Quizplus · Accepted Answer

When firms are able to limit competition through government licensing restrictions, the supply curve shifts to the left, resulting in a decrease in output and an increase in price. This would result in a restricted market supply of S₂, leading to a higher price and less than efficient level of output.

Figure 5-1 in Figure 5-1, S1 and D Illustrate

Figure 5-1 in Figure 5-1, S₁ and D Illustrate