Question

Do you think that markets are mostly competitive and, therefore, efficient or do you believe that there is substantial market power that leads to inefficiencies? Why? Explain fully in detail

Answer 1

Answer:

I believe that there is substantial market power that leads to inefficiencies because big firms with substantial market power do manipulate the prices of their products in the market to increase their profits which makes the market inefficient. The market is said to be inefficient when the firm is not producing maximum output or is not fulfilling the market demands. The big firms who have market powers due to their unique production techniques, marketing strategy to make their products different etc they affects the market supply or demand as per their benefits and their this substantial market power leads to inefficiencies in the market. For example Apple and Microsoft has substantial market power due to their technologies superiority over others and they control the prices to some extant and manipulates the supply or demand for their products in the market to increase their profit margins