Firms are said to have “market power” when they have some ability to influence market price and maintain economic profits. If a business has market power, we can infer that there is some barrier to entry restricting the entry of new firms. Provide an example of a firm that has market power due to a barrier to entry. Be sure to describe the type of barrier to entry that is restricting competition in this market.
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When creating your post, remember to justify the firm's degree of market power by demonstrating that the firm has some ability to influence the market price and earn economic profits. Do not just explain how massive and popular a firm is when justifying market power.
Yes, firms are sad to have " market power” when they have some ability to influence market price and maintain economic profits.
Generally, firm enjoys the market share when the major share of market is hold by the firm which cold be possible only if there is some barriers to the competition ,
for example, in case of monopoly or in the case of duopoly or oligopoly market in which there is restriction on the entry and exit of the firms by the way of patents, copywrights, liscence, etc.
There are many examples,
Intel and AMD in consumer dekstop computer microprocessor market.Under this market, there is barrier of patent which help the firms to attain there maximum market share, as patent helps in keeping there technology preserved and not to be used by others without permmision which help the firms in gaining the market share.
in this market there is high degree of market power as they have high influence ability in attracting the high maket price and earn economic profit.
for example, first processor, Intel 4004 and the latest is 10th Gen Intel Core H-series processor
and all the different processors vary from each other and are priced accordingly by the firm as per their cost and earning profit margins.
Although intel also face competition from AMD , samsung, etc still attains maximum share due to advance technology used by the large comanies and rest competition is seen in the own built computers and devices to be used for personal work .
Firms are said to have “market power” when they have some ability to influence market price...
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
(a) Why are firms operating under perfectly competitive market said to be a ‘price taker’? What impact does this have on the firm demand curve? (4 marks) (b) “Firm operating under perfect competition can only earn zero economic profit in the long run" Discuss this statement (6 marks)
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