Sellers who are in _____ markets face a less extreme trade-off between higher prices and higher quantity than sellers in perfect competition. As a result of this, they can _____.

Question

Quizplus · Accepted Answer

In imperfectly competitive markets, sellers have some degree of market power that allows them to charge higher prices and sell higher quantities than in perfect competition. This means they can earn higher profits by achieving a balance between price and quantity. Choice A is incorrect because sellers in perfectly competitive markets cannot increase demand as it is determined by the market. Choice C is incorrect because sellers in perfect competition cannot gain market power as they are price takers. Choice D is incorrect because the reduction of costs is possible for firms in any market structure.

Sellers Who Are in _____ Markets Face a Less Extreme