Market Power Is Illegal

question 28

Multiple Choice

Market power is illegal.

• A) True, no one is allowed to charge a price greater than marginal cost.
• B) False.
• C) True, no one is allowed to charge a price greater than average cost.
• D) False, because market power guarantees price equal to average cost.

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Definitions:

Economic Profits

Economic profits are the total revenues of a firm minus the opportunity costs of all inputs, reflecting the surplus generated beyond the normal rate of return.

Partial Equilibrium

An economic analysis or condition where the equilibrium is studied for only a part of the market, keeping other parts constant.

Personal Computer Industry

A sector of the technology market that focuses on the manufacturing, distribution, and sale of personal computers and related software and hardware.

ATC Curve

The Average Total Cost curve represents the per-unit cost of production (fixed plus variable costs) at different levels of output.