A necessary condition for market power to exist for a particular company in a market is that
A)information must be understood by both buyers and sellers.
B)effective barriers to entry must exist.
C)the number of firms should be over 150.
D)consumers perceive all products as homogeneous.

Question

Quizplus · Accepted Answer

Without effective barriers to entry, new companies can enter the market and potentially take away market share from existing companies, reducing their market power. Therefore, effective barriers to entry are a necessary condition for market power to exist for a particular company in a market.

A Necessary Condition for Market Power to Exist for a Particular