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The amount of market power a firm has depends on

A. the closeness of substitutes for its product.
B. how easily consumers can be fooled.
C. how large it is.
D. whether it creates externalities.

Please Explain Answer

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Related questions

Point out one product that you believe is produced by a "pure" monopoly firm (or a firm with a high degree of monopoly power). Is it a local, regional or national monopoly?

What are some of the Barriers to Entry into this industry?

For the product listed, list substitute(s) for this "monopoly". Demonstrate how the relative "closeness" of the substitutes listed determines, to a large degree, effective limits to the monopoly power of these firms.

A Monopolist

A. can force consumers to pay whatever it wants them to pay for its product.
B. has no incentive to worry about the quality of its product.
C. is constrained by a downward-sloping demand curve.
D. All of the above

Please explain answer.

Determinants of the price elasticity of demand Consider some determinants of the price elasticity of demand:
• Number of substitutes
• Whether the good is a necessity or a luxury
• Percentage of one's budget spent on the good
• Time horizon being considered
 
A. A good with many close substitutes is likely to have relatively ___________ demand since consumers can easily choose to purchase one of the close substitutes if the price of the good rises.
 
B. A good's price elasticity of demand depends in part on how necessary it is relative to other goods. If the following goods are priced approximately the same, which one has the least elastic demand?
1. Chemotherapy for cancer patients
2. Yacht
 
The price elasticity of demand for good also depends on how you define the good.
 
C. Organize the goods found in the following table by indicating which is likely to have the most elastic demand, which is likely to have the least elastic demand, and which will have demand that falls in between.
1. Beverages
2. Merlot
3. Wine
 
D. The price elasticity of demand is also affected by the given time horizon. Other things being equal, the demand for natural gas will tend to be _________ elastic in the short run than in the long run.

 

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