Following the Rational Rule for Sellers, how does output for a seller who has market power compare to output for a seller who does not have market power?
A)Output is the same in both situations.
B)Output is higher with market power than without market power.
C)Output is higher without market power than with market power.
D)The level of market power has no impact on output.

Question

Quizplus · Accepted Answer

Output is typically higher without market power than with market power because a seller with market power will restrict output to increase prices and maximize profits, whereas a seller in a competitive market will produce more at lower prices due to the competitive pressure.

Following the Rational Rule for Sellers, How Does Output for a Seller