The difference between the price and marginal cost is a measure of a ﬁrm's _____.
A) labour productivity
B) eﬃciency in production
C) monopoly power
D) capital usage

Question

Quizplus · Accepted Answer

The difference between the price and marginal cost is a measure of a firm's monopoly power. In a competitive market, firms have little to no ability to set prices above marginal cost, while in a monopolistic market, firms can set prices significantly above marginal cost, indicating monopoly power.

The Difference Between the Price and Marginal Cost Is a Measure