19. Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to (A) increase. (B) remain unchanged. (C) decrease by less than 20 percent. (D) decrease by more than 20 percent.

8. When a market is characterized by an externality, the government (A) can correct the market failure only in the case of positive externalities. (B) can correct the market failure only in the case of negative externalities. (C) can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality. (D) cannot correct for externalities due to the existence of patents.

19. Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
(A) increase.
(B) remain unchanged.
(C) decrease by less than 20 percent.
(D) decrease by more than 20 percent.

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