Compared to Businesses with Market Power,businesses in Perfect Competition Will

question 13

Multiple Choice

Compared to businesses with market power,businesses in perfect competition will charge __________ prices and sell __________ output.

• A) higher; more
• B) higher; less
• C) lower; more
• D) lower; less

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Definitions:

Mark-Up

The amount added to the cost price of goods to cover overhead and profit; it is the difference between the cost of a good or service and its selling price.

Market Power

The ability of a company or entity to influence the price and output levels in a market.

Elasticity Of Demand

A measure of how much the quantity demanded of a good changes in response to a change in its price.

Mark-Up

A percentage added to the cost price to determine the selling price.