A firm that has market power
A)can charge whatever it wants for its product.
B)can charge a price above marginal cost.
C)has positive economic profits.
D)does not lose sales when increasing price.

Question

Quizplus · Accepted Answer

A firm with market power can indeed charge a price above marginal cost because it faces a downward-sloping demand curve, allowing it to set prices higher than marginal cost without losing all its customers. Choices A, C, and D are not necessarily true for all firms with market power.

A Firm That Has Market Power