Question

Which list correctly ranks firms from least market power to most market power?

A) Small local businesses
B) Monopolies
C) Oligopolies
D) Perfectly competitive firms

Answer 1

Perfectly competitive firms have the least market power, followed by small local businesses, oligopolies, and monopolies.

Step-by-step explanation:

The correct ranking from least market power to most market power is as follows:

1. Perfectly competitive firms: In a perfectly competitive market, there are many firms selling identical products. These firms are price takers and have no market power.
2. Small local businesses: Small local businesses have some market power as they have local customer bases, but their power is less than that of monopolies and oligopolies.
3. Oligopolies: Oligopolies are markets dominated by a small number of firms. These firms have significant market power and often strategically choose output, pricing, and other decisions based on the actions of other firms in the market.
4. Monopolies: Monopolies have the highest market power as they are the sole provider of a product or service in a market with no close substitutes.