Suppose a firm decides to cut its production in half. One could claim that this firm has market power if there is a significant change in the

Question

Quizplus · Accepted Answer

If the firm has market power and cuts its production in half, this should significantly affect the market price of the product. If the market price remains relatively unchanged, it suggests that the firm may not have had significant market power to begin with. Therefore, the best choice is B.

Suppose a Firm Decides to Cut Its Production in Half