Questions: The elastic a firm's demand curve, the greater its market power

The answer is the second one: less; market power.

Explanation for each option:

1. Less; output: This option suggests that a more elastic demand curve results in less output. However, elasticity of demand is more directly related to market power and pricing rather than output levels. Therefore, this option is incorrect.

2. Less; market power: This is the correct answer. A more elastic demand curve means that consumers are more responsive to price changes. As a result, the firm has less ability to set prices above marginal cost without losing a significant number of customers, indicating less market power.

3. More; costs: This option implies that a more elastic demand curve leads to higher costs, which is not directly related. Elasticity affects pricing and revenue, not the cost structure of a firm. Therefore, this option is incorrect.

4. More; market power: This option is incorrect because a more elastic demand curve actually indicates less market power, as the firm cannot easily increase prices without losing customers.

In summary, the elasticity of a firm's demand curve is inversely related to its market power. A more elastic demand curve means the firm has less market power.