The average percentage markup in the economy
A) is greater,the more competitive are market conditions
B) is greater,the less competitive are market conditions
C) is unaffected by the competitive conditions of the economy
D) tends to be highly unstable from year to year
E) tends to be stable from year to year,ensuring that the price level is stable from year to year

Question

Quizplus · Accepted Answer

The markup refers to the difference between the cost of production and the selling price of a good or service. In less competitive markets, businesses have greater pricing power and can therefore charge higher prices, leading to a greater percentage markup. Conversely, in more competitive markets, businesses have less pricing power and must keep prices lower to stay competitive, resulting in a lower percentage markup. Therefore, the average percentage markup is greater, the less competitive are market conditions.

The Average Percentage Markup in the Economy