The Development of Market Power by a Firm Is Considered

question 119

Multiple Choice

The development of market power by a firm is considered to be a market failure because firms with market power will

• A)Produce more and charge a lower price than what would be socially optimal.
• B)Tend to ignore external costs.
• C)Produce less and charge a higher price than what would be socially optimal.
• D)Not respond to consumer demanD.Market power allows one or more producers to attain discretionary power over the market's response to price signals.Firms may use that discretion to enrich themselves by keeping output low and prices high.

---

Definitions:

Language

A system of communication used by a particular community or country, involving the use of words in a structured and conventional way.

Social Inequality

The unequal distribution of resources, opportunities, and rights among members of a society.

Ethnomethodology

A technique for studying human interaction by deliberately disrupting social norms and observing how individuals attempt to restore normalcy.

Social Norms

Social norms are the unwritten rules and expectations that govern behavior within a society, dictating what is considered acceptable or taboo.