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Market Power and Raising Prices

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Provide your rationale on whether or not a firm has to possess market power in order to raise prices

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This solution of 351 words describes and defines market power as well as discuss situations when companies raise prices. References used are included.

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A buyer or a firm has market power when it can dictate the market price of its products or services. One customer is said to have market power when its vendors don't have many buyers for their products or services. When this is the case, the customer can lower the price and still keep the suppliers. In another situation, a small company with very few competitors can gain market power as it can raise its prices for as long as there are no competitors in the ...

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