The Existence of Imperfectly Competitive Firms Implies a Market Failure

question 85

Multiple Choice

The existence of imperfectly competitive firms implies a market failure because

• A)they do not produce a productively efficient level of output.
• B)their market power allows them to deceive consumers.
• C)they lead to a socially undesirable distribution of income.
• D)there is no way to prevent these firms from abusing their market power.
• E)those firms will maximize profits by setting price above marginal cost.

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Definitions:

Competitive Advantage

The unique attributes or capabilities that allow an organization to outperform its competitors, resulting in greater sales, margins, and customer loyalty.

Economic Responsibility

The obligation of an individual, organization, or government to optimize the economic impact of its decisions on stakeholders and society at large.

Creditors

Individuals or entities to whom money is owed by a debtor or borrower.

Social Responsibility Pyramid

A framework used to depict how a business should prioritize its responsibilities, from basic economic functions to ethical duties.