A competitive firm
A)Has the market power to compete effectively.
B)Is large enough relative to the market to be taken into account by competitors.
C)Confronts a downward-sloping firm demand curve.
D)Is a price taker.

Question

Quizplus · Accepted Answer

A competitive firm is a price taker, meaning it has no market power to set prices and must accept the prevailing market price. It is also small relative to the market and must compete with many other firms. The firm demand curve it faces is perfectly elastic, as it can sell as much as it wants at the prevailing market price.

A Competitive Firm