Question

Read each question and choose the best answer.

A firm might try to increase its market power in order to
A. charge higher prices for the goods it produces.
B. lower the price level throughout the market.
C. encourage more firms to enter the market.
D. boost competition through deregulation.

Answer 1

The best answer is:

A. charge higher prices for the goods it produces.

Increasing market power typically allows a firm to exert more control over pricing and potentially increase prices above the competitive level.