Question: Please help to choose the answer for the following multiple-choice question and explain the reason to select the answer. . Thanks. Question What type of

Please help to choose the answer for the following multiple-choice question and explain the reason to select the answer. . Thanks.

Question

What type of demand curve does a firm with market power pr3efer to face for its products: relatively elastic or inelastic? Why?

Choices:

A) A firm with market power porphyries to face a steep demand curve because the more steep the demand curve., the more the firm with market power can raise its price above marginal cost.

B. Firms with market power always prefer to operate in the inelastic segment of their demand curve to maximise profits.

C. Firms with market power can control prices regardless of the shape of their demand curve.

D. A firm with market power prefers to face an inelastic demand curve because of more inelastic the demand curve, the more the firm with market power can raise its price above average cost.

Regards,

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