Discussion : Microeconomics

Discussion : Microeconomics

NOTE: please no Matching Ratio

Topic: Market Power

Write a one to two page paper, addressing the following:

a. Describe in your own words the concept of market power.

b. Provide an example of a firm exercising its market power.Referring to your example above, answer the following questions:

What are the sources of the firm’s market power?
Can they be sustained over a short run / long run?
c. Answer the question below in your conclusion:

Why is it hard for a firm to maintain market power over a Long Run?

Solution Preview

Discussion
Microeconomics
Part A
The concept of market power refers to the situation where a company has the discretion to raise the price that it charges for goods and services over the marginal cost. It means that the organization has the power to increase the prices of the products and services that it provides into the market without affecting the quantity that is demanded in the market.

(443 words)