Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to
A)increase.
B)remain unchanged.
C)decrease by less than 20 percent.
D)decrease by more than 20 percent.

Question

Quizplus · Accepted Answer

In a competitive market, individual firms are price takers, meaning they cannot influence the market price by changing their output.

Suppose a Firm in a Competitive Market Reduces Its Output