Question

Market power"" Select one: a. Is the ability to lower costs and earn monopoly profits. b. is the ability to raise price without losing all sales. c. becomes ""monopoly power"" when the degree of market power is sufficiently high. d. both a and b

Answer 1

Answer:

The correct answer is option b.

Explanation:

Market power can be defined as the ability of a firm or a group of firms to increase the price above the competitive level and do not lose all the demand.

The firms in a perfectly competitive market have no market power because there are a number of firms in the market. If a firm increases the price, its demand will fall to zero.

In imperfect competition though, the firms enjoy a certain degree of market power.