When firms are said to be price takers, it implies that if a firm raises its price,
A)buyers will go elsewhere.
B)buyers will pay the higher price in the short run.
C)competitors will also raise their prices.
D)firms in the industry will exercise market power.

Question

Quizplus · Accepted Answer

When a firm is a price taker, it means that it has no market power to influence the price of its product. As a result, if the firm raises its price, buyers will go elsewhere because they have many other options to choose from at similar or lower prices. Therefore, the best choice is A.

When Firms Are Said to Be Price Takers, It Implies