Which of the following firms is most likely to have market power?
A) a grocery store in a metropolitan area
B) a gas station in a suburb
C) a pub in a college town
D) the only hotel in a rural area

Question

Quizplus · Accepted Answer

The only hotel in a rural area is likely to have market power because there are no close substitutes for the hotel in the area, giving it the ability to charge higher prices without losing customers. The other options involve firms in more competitive markets with more substitutes and therefore less market power.

Which of the Following Firms Is Most Likely to Have