You own a lemonade stand in a competitive lemonade market, and as such, you are a price- taking firm.Which of the following events would most likely increase your market power?
A)The government abolishes the system of patents and copyrights.
B)A booming economy increases the demand for lemonade and attracts entry into the market.
C)The average total cost curve for firms in the industry is horizontal.
D)You own exclusive rights to harvest lemons from all domestic citrus orchards.

Question

Quizplus · Accepted Answer

Owning exclusive rights to harvest lemons from all domestic citrus orchards would give the firm a unique advantage and eliminate competition in terms of access to resources, increasing its market power. The other options would not have a significant impact on the firm's market power in a competitive market.

You Own a Lemonade Stand in a Competitive Lemonade Market