Competitive firms cannot individually affect market price because
A)There is an infinite demand for their goods.
B)Demand is perfectly inelastic for their goods.
C)Their individual production is insignificant relative to the production of the industry.
D)The government exercises control over the market power of competitive firms.

Question

Quizplus · Accepted Answer

Competitive firms are price takers, meaning they must accept the market price determined by the interaction of supply and demand. The individual production of a competitive firm is relatively small compared to the entire market, so their actions have no significant impact on the market price.

Competitive Firms Cannot Individually Affect Market Price Because