Question

The University of California at Irvine (UCI) allows student organizations and private firms to sell items on campus to raise funds for various activities. Many of the organizations sell boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. If legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, the

Answer 1

Options Available Are:

A. Demand for boba would increase.

B. Demand for boba would fall.

C. market would become more competitive.

D. Supply for boba would increase.

E. Market would become less competitive.

Answer:

Option E. Market would become less competitive.

Explanation:

The restriction of entry of private firms into boba market will increase the barriers to entry thus lowering the market entrants and minimizing the market. Furthermore, this lowering of market entrants will encourage the market players to increase the price of boba in the next few months which means that the market is less competitive.

Hence the option E is correct here.