2b. Firm '5 market power: an explanation for a firm '5 pricing behavior. 5 marks The economists contribute an argument to the theory of the firm that: firms in different markets, and even different firms within the same market, are likely to have different degree of market power. And in turn, a firm's market power is believed to help its capacity to charge relatively high prices compared to their rivals without losing all of its customers. 1. What is your understanding of the concept of market power? What are the factors determining a firm's market power? What is the extent of a firm's market power in perfectly competitive markets versus monopolistically competitive markets? 2. Observe an online market platform and search for a real-life example of a firm in a competitive market charging different price levels from its rivals (the competitors who are selling similar products). Give an explanation of the relevance of the market power to the firm' pricing decision. 2c. Product differentiation is a way for firms to avoid zero economic profits in long run. 5 marks. It is argued that firms differentiate their products and sustain positive profits while other firms imitate and drive down their profits in the competitive business environments. Would you defend or refute the economic argument above? Explain your position. Do research on a firm's product innovation to demonstrate the concept of product differentiation (Le. a real-life example of a firm's product of which a bundle of characteristics that differs from any existing product)