For a firm with market power,the price effect is the ________.
A) increase in revenue from selling one more unit of output
B) decrease in revenue from selling one more unit of output
C) decrease in revenue arising from the reduction in price necessary to sell another unit of output
D) increase in revenue arising from the reduction in price necessary to sell another unit of output

Question

Quizplus · Accepted Answer

For a firm with market power, the firm can influence the price of the good or service it produces. In order to sell more units of output, it will have to reduce the price. The price effect is the decrease in revenue that arises from the reduction in price necessary to sell another unit of output. Therefore, the correct answer is C.

For a Firm with Market Power,the Price Effect Is the ________