Question

Firms that have significant market power tend to:

a. Produce at minimum average total costs.
b. Pursue cost reductions.
c. Pursue product improvements.
d. Inhibit economic growth.

Answer 1

Firms with significant market power tend to pursue cost reductions and product improvements to increase their profits and maintain their dominance.

Step-by-step explanation:

Firms that have significant market power tend to pursue cost reductions and product improvements in order to increase their profits and maintain their market dominance. By pursuing cost reductions, firms can lower their production costs and increase their profit margins. Similarly, by investing in product improvements, firms can attract more customers and differentiate themselves from their competitors.