Which of the following market structures is not associated with market power?

• A. Perfect competition
• B. Monopoly
• C. Monopolistic competition
• D. Oligopoly

Answer: (A)

Verified step by step guidance

1. Understand the concept of market power: Market power refers to the ability of a firm to influence the price of a good or service in the market, rather than taking the market price as given.
2. Review the characteristics of each market structure: Perfect competition, monopoly, monopolistic competition, and oligopoly.
3. Recall that in perfect competition, many firms sell identical products, and no single firm can influence the market price. Firms are price takers, meaning they have no market power.
4. Recognize that monopoly, monopolistic competition, and oligopoly all involve some degree of market power because firms can influence prices due to product differentiation, fewer competitors, or barriers to entry.
5. Conclude that perfect competition is the market structure not associated with market power because firms must accept the market price and cannot influence it.