Which of the following lists places the types of businesses in order from the least to the greatest amount of market power?

• A. Perfect competition, monopolistic competition, oligopoly, monopoly
• B. Monopoly, oligopoly, monopolistic competition, perfect competition
• C. Monopolistic competition, perfect competition, monopoly, oligopoly
• D. Oligopoly, monopoly, perfect competition, monopolistic competition

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. The greater the market power, the more control a firm has over setting prices above marginal cost.
2. Recall the characteristics of each market structure: Perfect competition has many firms selling identical products with no control over price (least market power). Monopolistic competition has many firms but with differentiated products, giving some price-setting ability. Oligopoly consists of a few firms with significant market control and interdependent pricing. Monopoly is a single firm controlling the entire market, having the greatest market power.
3. Rank the market structures from least to greatest market power based on their characteristics: Start with perfect competition (least power), then monopolistic competition, followed by oligopoly, and finally monopoly (greatest power).
4. Compare the given options to this ranking to identify which list correctly orders the market structures from least to greatest market power.
5. Confirm that the correct order is: Perfect competition, monopolistic competition, oligopoly, monopoly.