If a firm has substantial market power,it must be operating in an industry that would be classified as
A) a monopoly.
B) perfectly competitive.
C) monopolistically competitive.
D) perfectly competitive or monopolistically competitive.
E) perfectly competitive or monopolistic.

Question

Quizplus · Accepted Answer

Substantial market power indicates that a firm has the ability to influence the price of the product or service it provides. This is a characteristic of a monopoly, as there are no close substitutes available in the market, allowing the firm to have a significant control over the price. In contrast, in perfect competition and monopolistic competition, firms do not have substantial market power as there are many close substitutes and the market is more competitive. Therefore, the answer is A) a monopoly.

If a Firm Has Substantial Market Power,it Must Be Operating