Which of the following would indicate a relatively large amount of market power?

Question

Quizplus · Accepted Answer

A relatively large amount of market power means a company is able to control the price of their product without losing too many customers. A low cross-price elasticity with other products means that customers are less likely to switch to a substitute product, which indicates a larger market power. Highly price elasticity demand means that customers are sensitive to price changes and are more likely to switch to a substitute product, indicating lower market power. Low Lerner index also indicates a lower market power because it measures the degree of markup a firm can charge above the marginal cost, and a low index means that the price is closer to the marginal cost, indicating more competition and lower market power. Therefore, B is the best answer.

Which of the Following Would Indicate a Relatively Large Amount