Market power refers to
A)the ability of consumers to dictate what products should be produced.
B)the ability of a firm to advertise its product and succeed in selling more output.
C)the ability of a firm to sell at a lower price than rival sellers.
D)the ability of a firm to charge a price higher than the marginal cost of production.

Question

Quizplus · Accepted Answer

Market power refers to the ability of a firm to charge a price higher than the marginal cost of production, thereby generating excess profits. This ability to set prices above the competitive level is usually associated with firms that hold a dominant market share and face limited competition. The other options (A, B, and C) do not accurately capture the concept of market power.

Market Power Refers to