All of the following are strategies a firm with market power can adopt to increase it profits over time except: A

All of the options are strategies a firm with market power can adopt to increase its profits over time EXCEPT: B. setting price equal to the marginal costs of production. A firm would have no reason to do that because its market power allows it to set a price above its marginal cost, and thus to earn "economic," or above normal, profits. So that is something a firm would NOT do.

A firm with market power would be able to:

• Erect barriers to entry into the market. An example would be if a pharmaceutical company had a patent on a drug. The patent would keep other competitors from being able to produce the same product.
• Arrange mergers with, and acquisitions of, competing firms. A merger would mean two companies of equal strength combining into one company. Miller-Coors and Anheuser-Busch would be examples in the beer industry. Acquisitions would happen when a smaller firm is bought out and absorbed into a larger one. An example would be the acquisition of Dr. Pepper by PepsiCo.
• Influence the regulatory process related to its business. The soft drink industry is an example here also. According to NPR, it has spent a great deal of money in opposition to soft drink taxes in Berkeley, California, and in Pennsylvania.