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
A)can choose the price at which it sells its butter but not the quantity of butter that it produces.
B)can choose quantity of butter that it produces but not the price at which it sells its butter.
C)can choose both the price at which it sells its butter and the quantity of butter that it produces.
D)cannot choose either the price at which it sells it butter or the quantity of butter that it produces.

Question

Quizplus · Accepted Answer

In a competitive market, the price of the product is determined by the market forces of supply and demand. Therefore, LML cannot choose the price at which it sells its butter. However, it can choose the quantity of butter that it produces, based on the market demand and production costs.

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