Which of the following situations describes the greatest market power ?
Correct answer: C. Microsoft's impact on the price of desktop operating systems
- A. Subaru's impact on the price f cars
- B. a farmer's impact on the price of corn
- C. Microsoft's impact on the price of desktop operating systems
- D. a student's impact on college tuition
Explanation
Microsoft historically dominated desktop operating systems, so it could influence prices more than a Subaru manufacturer, an individual farmer, or a student. This reflects substantial market power arising from a dominant market position.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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