Societal Damage from Rising Market Power

Figure 2.21: Estimated Average Markup for US Firms (1955–2016)

Increasing Share of Economic Profits in US National Income

An economist analyzes historical pricing data for a broad cross-section of firms in a developed economy. They observe that, on average, the ratio of a product's price to its marginal cost of production was relatively low and declining in the 1970s, but began a steep and sustained increase starting around 1980. Which of the following economic phenomena does this observation most directly support?

According to economic data for the United States, the average price markup charged by firms has increased consistently and without interruption every year since 1980.

Based on economic data for US firms from the mid-1960s to 2016, arrange the following periods in the correct chronological order according to the observed trend in the average price markup.

Analyzing Pricing Strategies Over Time

Analyzing Shifts in US Corporate Pricing Behavior

Match each time period with the corresponding trend observed in the average price markup for firms in the United States.

Describing Long-Term Pricing Trends in the US

An economist presents evidence showing that for the average US firm, the gap between the price of its products and the cost to produce one more unit of that product widened significantly between 1980 and 2016. Which of the following conclusions is most strongly supported by this specific observation?

An economic commentator claims, 'The period from 1980 to 2016 saw a relentless and uninterrupted increase in the pricing power of the average US firm.' Based on the observed historical data, which of the following findings most directly contradicts the 'uninterrupted' nature of this claim?

An economic historian argues that competition policies in the United States have been consistently effective at limiting the growth of corporate market power since the mid-20th century. Which of the following empirical findings for U.S. firms presents the strongest counter-evidence to this argument?

Interaction of Market Power and COVID-19 Shocks Drove Sellers' Inflation