Economics Consumer Surplus And Producer Surplus Questions
Market power refers to the ability of a firm or a group of firms to influence the market price or quantity of a good or service. It is the extent to which a firm can act independently of competitive forces in the market. A firm with market power has the ability to set prices higher than the competitive level, restrict output, or engage in other anti-competitive practices. Market power can arise from various factors such as having a dominant market share, having exclusive access to key resources or technology, or through government regulations or barriers to entry that limit competition. The presence of market power can result in reduced consumer welfare, higher prices, and lower output levels compared to a perfectly competitive market.