In the short run, a decrease in market power (or monopolization) will
A) increase the price level.
B) decrease the price level.
C) not affect the price level.
D) not affect output.

Question

Quizplus · Accepted Answer

A decrease in market power means that the firm's ability to control prices is reduced. As a result, competition will increase and prices will likely fall. This decrease in market power can be achieved through increased competition, government regulation, or other factors. Therefore, a decrease in market power will likely lead to a decrease in the price level in the short run.

In the Short Run, a Decrease in Market Power (Or