To the extent that a firm has market power, it can force its competitors out of business.

a. True

b. False

True.

A firm that is powerful in its market can force other firms out. This is because the powerful firm has more cost-efficient practices, a larger consumer base, more innovative workers, and enjoys economies of scale due to its size. The main way in which a powerful firm can force competitors out is by reducing its prices so much that the other firms cannot survive due to their losses. Apart from this, patented innovation can also force competitors out.