The degree to which a market provides socially optimal outcomes depends on the degree to which it

Question

Quizplus · Accepted Answer

Market power outcomes, where a single firm or group of firms have significant control over prices and output, can lead to socially suboptimal outcomes such as higher prices and lower output than would exist in a more competitive market. Therefore, the more closely a market resembles a competitive outcome, where many firms compete on price and quality, the more likely it is to provide socially optimal outcomes.

The Degree to Which a Market Provides Socially Optimal Outcomes