If a dominant firm is able to drive out the competitive fringe and become a monopolist, the firm would have _______ than if they were to remain a dominant firm.

Question

Quizplus · Accepted Answer

If a dominant firm becomes a monopolist, it has the power to raise prices and restrict output without losing significant market share to competitors. This means that the firm can charge a higher markup compared to when it was a dominant firm competing with a fringe of smaller firms. Therefore, the answer is D - a higher markup.

If a Dominant Firm Is Able to Drive Out the Competitive