In order to exercise control over the price of its product, a firm must be able to ________ competition.

Question

BlackTom AI · Accepted Answer

Question restatement: In order to exercise control over the price of its product, a firm must be able to ________ competition.

Option 1: maximize
This would imply the firm seeks to increase its price or profits by pushing for greater market power, but without the ability to influence or limit competition, price control is unstable or unsustainable due to substitutes, entrants, or price wars. Thus this option misstates the necessary condition for price control.

Option 2: increase
Increasing competition generally reduces a firm's ability to set prices, as more rivals or substitute options limit pricing power. Therefore, this option contradicts the idea of exercising price control and is not a suitable condition.

Option 3: not change
If competition remains unchanged, a firm still faces market forces that constrain pricing unless there is some barrier to entry or market power. Simply not changing competition does not describe a mechanism that enables price control, making this option incorrect.

Option 4: limit
To effectively control price, a firm typically needs some degree of market power granted by limited competition—through barriers to entry, brand loyalty, economies of scale, or other competitive constraints. Limiting competition creates the opportunity to influence or set prices rather than having them set by many competing firms. This aligns with economic theory on price setting and market dynamics, making this option correct.

In order to exercise control over the price of its product, a firm must be able to ________ competition.单项选择题

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