<Dd> P M C = P E D 1 + P E D . (\ displaystyle (\ frac (P) (MC)) = (\ frac (PED) (1 + PED)).) </Dd> <P> Note that PED will be negative, so the ratio is always greater than one . The higher the P / MC ratio, the more market power the firm possesses . As PED increases in magnitude, the P / MC ratio approaches one, and market power approaches zero . The equation is derived from the monopolist pricing rule: </P> <Dl> <Dd> P − M C P = − 1 P E D . (\ displaystyle (\ frac (P - MC) (P)) = - (\ frac (1) (PED)).) </Dd> </Dl> <Dd> P − M C P = − 1 P E D . (\ displaystyle (\ frac (P - MC) (P)) = - (\ frac (1) (PED)).) </Dd>

In which of the following market structures does a seller have no market power