Which of the following is true about market power?
A)An industry with 100 firms has more market power than the same industry with a single firm.
B)An industry with 100 firms has less market power than the same industry with a single firm.
C)An industry with 100 firms has the same market power as the same industry with any number of firms.
D)An industry with 100 firms has more market power than the same industry with 10 firms but less market power than the same industry with one firm.
E)An industry with 100 firms has less market power than the same industry with 10 firms but more market power than the same industry with one firm.

Question

Quizplus · Accepted Answer

Market power refers to the ability of a firm (or a group of firms) to influence the price and quantity of a good or service in the market. In general, a larger number of firms in an industry implies more competition and less market power. Therefore, an industry with 100 firms has less market power than the same industry with a single firm, because the latter has no competition at all. Option A is false. Option C is false. Option D is false because an industry with 100 firms is likely to have more competition and less market power than an industry with 10 firms. Option E is false for the same reason.

Which of the Following Is True About Market Power