Question

________ is the ability to raise prices above the level that perfect competition would produce by restricting the quantity supplied.

Answer 1

Answer:

Market Power

Explanation:

Market Power is the ability of firms to raise price above the level of perfect competition price. Perfect Competition charge Price = Marginal Cost, Imperfectly, other imperfect markets charge price > MC.

This power is used by imperfect market structures - monopoly, oligopoly, monopolistic competition. They can use this power because -  they have control over market price, as they comprise a significant part of market supply. Eg : Monopolies usually use 'artificial scarcity' model to maintain a surplus in market & charge higher prices.