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Market power refers to the a
Market power refers to the
a. power of a single person or small group to influence market prices.
b. ability of a person or small group to successfully market new products.
c. power of the government to regulate a market.
d. importance of a certain market in relation to the overall economy.
Expert Solution
The correct answer is A.
Market power refers to the power of a single person or small group to influence market prices.
Market power is characterized by an entity's ability and capacity or a small number of firms to determine and influence the level of prices in a market economy. It is also referred to as monopoly power, whereby the firm can raise, reduce, or maintain the prevailing prices amid competition in the market. When market power is exercised, output decreases significantly with a possible economic welfare loss because, with the existence of market power, profits cannot be increased through influencing prices.
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