Market power refers to a firm's ability to adjust the price of its product or service without losing all its customers to rivals. This is possible when the company has control over the supply in the market or there are significant barriers to entry for other firms. Thus, option A is the correct choice. Options B, C, D, and E describe other concepts related to market structures or government regulations.

Solved

Market Power _____

Question 18

Multiple Choice

Market power _____

A) is the ability of a firm to raise the price without losing all its sales to rivals.
B) tries to improve health and safety, such as by control of unsafe working conditions and dangerous products.
C) is any firm facing an upward sloping demand curve.
D) government regulation of natural monopoly, where, because of economies of scale average production cost is lowest when a single firm supplies the market.
E) is government regulation aimed at preventing monopoly and fostering competition in markets where competition is desirable.

Correct Answer: