Which of the following would reduce the monopoly power of a single firm in a monopoly market?
A)The acquisition of a patent for its production process
B)An increase in the demand for the firm's product
C)An increase in the price of the firm's product
D)A reduction in the number of rival firms

Question

Quizplus · Accepted Answer

A reduction in the number of rival firms would reduce the monopoly power of a single firm in a monopoly market. In a monopoly market, the absence of close substitutes for the product or service allows the firm to set prices and output levels that maximize their profits. However, if there are other rival firms producing the same or similar products, the single firm's monopoly power is reduced as they have to consider competitors' pricing strategies and may have to lower their prices to remain competitive. So, reducing the number of rival firms would give the single firm more control over the market and increase their monopoly power.

Which of the Following Would Reduce the Monopoly Power of a Single