Question

the COMP curve is downward sloped

a) Since firms increase the mark-up as the number of competitors rises

b) Since competition drives the mark-up down as the number of competitors falls

c) Since competition drives the mark-up down as the number of competitors rises

d) Since firms decrease the mark-up as the number of competitors falls

Answer 1

. In this case where the competition curve is downward sloping the best appropriate option is option d which means since firms decreases the markup as the number of competitors falls.
Markup is basically defined as a price which can be charged by the seller to expand their profit because market is the difference between the selling price that initially a seller decided and the cost of the product so therefore market price is important to determine and when form decreases the marker then only the number of computers Falls therefore among all the four options D is most appropriate and useful because all other option shows that direct relationship that is not at all possible when the competition curve is downward sloping