The average percentage markup in the economy
A) is of special interest in microeconomics
B) fluctuates greatly from year to year
C) depends on competitive conditions in the economy
D) depends on the level of GDP
E) increases as the interest rate increases

Question

Quizplus · Accepted Answer

The average percentage markup in the economy depends on competitive conditions in the economy. In more competitive markets, businesses will have less pricing power and therefore will have lower markups. In less competitive markets, businesses can charge higher prices and have higher markups. The other answer choices are incorrect because the average percentage markup is not of special interest in microeconomics as it is a macroeconomic concept, fluctuates but not to the extent of making B correct, is not directly dependent on the level of GDP (although GDP may indirectly impact competition and therefore markups), and is not necessarily correlated with interest rates, making E incorrect too.

The Average Percentage Markup in the Economy