Market power is illegal.
A) True, no one is allowed to charge a price greater than marginal cost.
B) False.
C) True, no one is allowed to charge a price greater than average cost.
D) False, because market power guarantees price equal to average cost.

Question

Quizplus · Accepted Answer

Market power refers to the ability of firms to raise prices above their marginal cost without losing all of their customers. This is not illegal in and of itself, but anti-competitive behavior such as collusion, price fixing, or abuse of dominant market position to limit market entry or access can be illegal.

Market Power Is Illegal