Of the sources of market power,the most common and enduring is
A) a patent.
B) a copyright.
C) exclusive ownership of an input.
D) a government franchise.
E) economies of scale.

Question

Quizplus · Accepted Answer

Economies of scale occur when a firm can produce at a lower cost per unit due to producing at a larger scale. This allows larger firms to undercut smaller competitors on price, creating a barrier to entry and giving them market power. Economies of scale can be difficult for competitors to replicate, making this a common and enduring source of market power. The other options (patent, copyright, exclusive ownership of an input, and a government franchise) are more specific sources of market power that may not apply to all industries or firms.

Of the Sources of Market Power,the Most Common and Enduring