8. Suppose we imagine that bars in Madison Park can be characterized as a monopolistically competitive industry with free entry. Suppose that the legal drinking age is lowered to 19. Our best short run prediction is that: (Unfortunately there seems to be evidence that such changes lead to increased numbers of alcohol related highway deaths)
  1. bars will increase prices to keep out the new drinkers.
  2. bars will experience a reduction in profit due to the increased costs of serving more patrons.
  3. bars will become more profitable due to the increase in demand.
  4. more bars will be opened.
  5. many bars will close.

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