If a firm can change market prices by altering its output,then it
A)Has market power.
B)Faces a flat demand curve.
C)Is a price taker.
D)Engages in marginal cost pricing.

Question

Quizplus · Accepted Answer

A firm that can change market prices by altering its output has the ability to influence market conditions, which is a sign of market power. This means that the firm has some control over the terms on which it trades with customers and suppliers, and can potentially earn higher profits as a result. By contrast, a price taker has no market power and must accept the market price as given, while a firm that engages in marginal cost pricing sets prices at the level of its production costs. A flat demand curve, meanwhile, indicates that a change in output has no effect on market prices, which implies that the firm is a perfect competitor with no market power.

If a Firm Can Change Market Prices by Altering Its