ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The larger the market share, the lower the firm’s productivity level. The stronger the competition, the higher productivity growth.

Detailed explanation-2: -A business with market power can take advantage of its market dominance to drive a competitor out of business or to prevent new competitors from starting up. This can reduce or eliminate competition from a market, harming consumers and the wider economy by increasing prices, and reducing choice and quality.

Detailed explanation-3: -Is the loss in efficiency due to market power large or small? Explain. A. small because almost every industry is perfectly competitive with firms that have no market power.

Detailed explanation-4: -Market efficiency refers to the degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to “beat” the market because there are no undervalued or overvalued securities available.