All of the following are strategies a firm with market power can adopt to increase it profits over time except:
A)mergers with, and acquisitions of, competing firms.
B)erecting barriers to entry.
C)setting price equal to the marginal costs of production.
D)influencing the regulatory process.

Question

Quizplus · Accepted Answer

Setting price equal to the marginal costs of production would actually decrease profits for firms with market power, as they would not be charging the highest possible price that consumers are willing to pay. The other options (mergers/acquisitions, barriers to entry, and influencing the regulatory process) all have the potential to increase a firm's market power and therefore increase profits over time.

All of the Following Are Strategies a Firm with Market