Suppose a single firm gains control of an industry by preventing other firms from entering the industry. As a result, the price charged by the single firm is much higher than the price that would be charged by many different firms producing this product in a competitive market. This situation can best be described as:

Question

Quizplus · Accepted Answer

This situation is a market failure because the monopoly power of the single firm leads to higher prices and reduced competition, which is inefficient compared to a competitive market.

Suppose a Single Firm Gains Control of an Industry by Preventing