Question

In the market for chicken sandwiches, where many firms operate, some of which, like Chick-Fil-A, have the ability to influence the price of their chicken sandwich, what can we infer about the market structure based on this premise alone?

A) The market is perfectly competitive due to the existence of market power.

B) The market is not perfectly competitive due to the existence of market power.

C) The market is not perfectly competitive due to the lack of market power.

D) The market is perfectly competitive due to the lack of market power.

Answer 1

The market for chicken sandwiches, where firms like Chick-Fil-A can influence prices, is not perfectly competitive because of the existence of market power.

Step-by-step explanation:

Based on the premise that some firms, like Chick-Fil-A, have the ability to influence the price of their chicken sandwich in a market where many firms operate, we can infer that the market structure is not perfectly competitive due to the existence of market power. This market power suggests that these firms can set prices to some degree, which is inconsistent with perfect competition, where no single firm can influence the market price. The correct answer to the question is B) The market is not perfectly competitive due to the existence of market power.