Question

In: Economics

Which of the following best describes a firm with market power operating in an industry? a...

  1. Which of the following best describes a firm with market power operating in an industry?
    1. a steep and relatively low demand curve faced by the firm
    2. a flat and relatively low demand curve faced by the firm
    3. a flat and relatively high demand curve faced by the firm
    4. a steep and relatively high demand curve faced by the firm

Solutions

Expert Solution

Option D is correct

If there is a market power associated with the firm it means it is able to sell a product which is popular and has a greater demand than its rivals. It should be is steeper because it will reflect that a large increase in the price will be required to discourage consumers from purchasing the product.

Rahul Sunny answered 2 years ago
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