Table 12.2
-Refer to Table 12.2.The firm represented in the table
A)has market power in the factor market.
B)has market power in the output market.
C)has market power in both the factor and product market.
D)has no market power in the factor or product market.

Question

Table 12.2 
-Refer to Table 12.2.The firm represented in the table
A)has market power in the factor market. 
B)has market power in the output market. 
C)has market power in both the factor and product market. 
D)has no market power in the factor or product market.

Quizplus · Accepted Answer

The firm's marginal revenue product (MRP) is greater than its marginal factor cost (MFC), which indicates that it has market power in the factor market. However, its marginal revenue (MR) is equal to the market price, which indicates that it does not have market power in the output market. Therefore, the firm has market power in the factor market but not in the output market.

Table 12.2 -Refer to Table 12.2.The Firm Represented in the Table