Diversification economies are achieved by the ability of firms to dictate prices by exerting market power.

Question

Quizplus · Accepted Answer

Diversification economies are achieved by spreading risk across different product lines or markets, not by exerting market power to dictate prices. In fact, exerting market power through monopoly or oligopoly positions can lead to reduced competition and ultimately result in higher prices for consumers.

Diversification Economies Are Achieved by the Ability of Firms to Dictate