Question

The loss in efficiency due to market power large or​ small? Explain. The loss in efficiency due to market power is____________.

A. large because virtually every firm has at least some market power.
B. large because almost every industry is a monopoly with firms that have substantial market power.
C. small because almost every industry is perfectly competitive with firms that have no market power.
D. small because even firms without market power are economically inefficient.

Answer 1

The answer is small because the firms with the market power of substantial are rare.

Step-by-step explanation:

The loss in the efficiency is because of the market power which is small as the firms with the essential or substantial market power are rare in the market.

The firms with the power substantial market are the monopoly firms and these firms are very rare. Some competition exists in firms in the market but this competition limit the power of the market by decreasing the dead weight loss and keeping the cost closer to the marginal cost. So, it will result in loss in efficiency.

Note: The correct answer or option is missing. So, providing the correct statement.