Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not
A)choose the quantity of butter to produce.
B)set marginal revenue equal to marginal cost to maximize profit.
C)have any fixed costs of production.
D)choose the price at which it sells its butter.

Question

Quizplus · Accepted Answer

Since the market for butter is competitive, LML cannot set the price of its butter. It must accept the prevailing market price determined by supply and demand forces. Therefore, option D is the best choice.

Land of Many Lakes (LML) Sells Butter to a Broker