Use the graphs to answer questions
-Graph B illustrates
A)a market with perfect competition.
B)a monopolistic market.
C)a firm that is a price taker.
D)a firm that has market power.

Question

Use the graphs to answer questions 
-Graph B illustrates
A)a market with perfect competition. 
B)a monopolistic market. 
C)a firm that is a price taker. 
D)a firm that has market power.

Quizplus · Accepted Answer

Graph B illustrates a firm that is a price taker, meaning that the firm has no market power and must accept the market price as given. This is shown by the horizontal line representing the firm's demand curve, which is perfectly elastic. The firm cannot raise the price without losing all of its customers, nor can it lower the price and still sell any additional units. Therefore, the best choice is C, a firm that is a price taker.

Use the Graphs to Answer Questions