Which of the following statements best reflects a price-taking firm?
A)The firm can sell only a limited amount of output at the market price before the market price will fall.
B)If the firm were to charge less than the going price, it would maximize its profits and revenues.
C)If the firm were to charge more than the going price, it would sell none of its goods.
D)Both b and c are correct.

Question

Quizplus · Accepted Answer

A price-taking firm cannot influence the market price and must accept the prevailing market price. If it charges more, it will sell none of its 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