All else constant,so long as it is negative,as the cross price elasticity of demand between a firm's product and those of its competitors increases,so does the market power possessed by the firm.

Question

Quizplus · Accepted Answer

The statement is false. As the cross price elasticity of demand between a firm's product and those of its competitors increases (meaning that customers are more likely to switch to a competitor's product if the firm raises its prices), the firm's market power decreases. Higher cross price elasticity of demand indicates that the firm faces more competition and has less ability to raise prices without losing customers.

All Else Constant,so Long as It Is Negative,as the Cross