Question

A firm with market power has an individual consumer demand of q = 20 − 4p and costs of c = 4q. what is the optimal price to charge for a block of 4 units?

Answer 1

$4, is the optimal price to charge for a block of 4 units.

Market power is the ability of a firm to influence supply, demand, or both in order to change the price of a product in the marketplace.

A corporation with significant market power has the power to control its profit margin by manipulating the market price. It may also be able to raise barriers for potential new entries into the market.

Because they may set or change the retail price of an item without giving up market share, companies with market power are frequently referred to as "price makers."

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