Which of the following statements best reflects a price-taking firm?
A)If the firm were to charge more than the going price, it would sell none of its goods.
B)The firm has an incentive to charge less than the market price to earn higher revenue.
C)The firm can sell only a limited amount of output at the market price before the market price will fall.
D)Price-taking firms maximize profits by charging a price above marginal cost.

Question

Quizplus · Accepted Answer

A price-taking firm operates in a perfectly competitive market where it cannot influence the market price. If it charges more than the market price, it will not sell any goods because buyers can purchase the same goods at the market price from other sellers.

Which of the Following Statements Best Reflects a Price-Taking Firm