If a firm is a price taker, it operates in a
A)competitive market.
B)monopoly market.
C)oligopoly market.
D)monopolistically competitive market.

Question

Quizplus · Accepted Answer

A price taker is a firm that has no control over the price of the product it sells, and must accept the market price as given. This is characteristic of a perfectly competitive market, where there are many small firms selling identical products and no individual firm has any market power to influence the price. In contrast, a monopoly market is characterized by a single firm with full control over the price, while an oligopoly market is characterized by a small number of large firms with some market power. A monopolistically competitive market has many firms selling differentiated products, and while individual firms have some degree of market power, they still face competition from close substitutes.

If a Firm Is a Price Taker, It Operates in a