In which of the following situations would Maria's Doughnut Shop have the LEAST market power?
A)Within three miles, there are five other doughnut shops and three bakeries that sell breakfast pastries.
B)There are two rival doughnut shops within three miles but no other bakeries.
C)The closest doughnut shop is 10 miles away, but there is a bakery with breakfast pastries two miles away.
D)The closest doughnut shop or bakery is 25 miles away from Maria's shop.

Question

Quizplus · Accepted Answer

When there are many other doughnut shops and bakeries in close proximity, Maria's Doughnut Shop would have the least market power as consumers have more options and can easily switch to another seller. In this situation, Maria's Doughnut Shop will face tough competition and will have limited pricing power.

In Which of the Following Situations Would Maria's Doughnut Shop