firm with market power

Question

Quizplus · Accepted Answer

A firm with market power can increase its price without losing all of its sales, as its customers may have limited options for substitutes. This is because such a firm faces a downward-sloping demand curve, which means that as it raises its prices, the quantity demanded decreases. However, the extent to which the quantity demanded decreases depends on how much competition the firm faces from other sellers. A firm with market power may or may not be the only seller in a market, depending on the level of competition in that market.

Firm with Market Power