Which statement about market power is incorrect?
A)It can lead to price increases that exploit consumers.
B)It can lead to resource misallocation.
C)It can lead to inefficient production and the lack of innovation.
D)Monopoly power can lead to decreases in producer surplus.

Question

Quizplus · Accepted Answer

Monopoly power can lead to a decrease in consumer surplus, as the firm can charge higher prices, but it actually leads to an increase in producer surplus, as the firm has more control over the market and can charge higher prices which result in higher profits. Therefore, statement D is incorrect.

Which Statement About Market Power Is Incorrect