Which market structure is least likely to result in a firm having market power? a. 2,000...

Which market structure is least likely to result in a firm having market power?

a. 2,000

b. 1,600

c. 2,200

d. 2,750

Solutions

Expert Solution

If the options are indicative of the number of firms in the market, then the market with the largest number of firms will lead to a firm having the least market power. The market structure of perfect competition has a large number of buyers and sellers and therefore no one single buyer or seller's decision can influence the market price and quantity. The firms are price takers in this case. Therefore, larger the number of firms, the lesser market power it has.

Hence option D i.e 2750 will be the correct answer.

Rahul Sunny answered 1 year ago

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