Imperfect competition and market power
A) are major sources of inefficiency.
B) result in higher output than in perfect competition.
C) are always the result of product differentiation.
D) result from diseconomies of scale.

Question

Quizplus · Accepted Answer

Imperfect competition and market power can lead to inefficiencies in the market by enabling producers to set prices above marginal costs, which can result in reduced output and higher prices compared to a perfectly competitive market. This does not necessarily mean higher output than in perfect competition, nor are they always the result of product differentiation or diseconomies of scale.

Imperfect Competition and Market Power