A Price-Taking Firm Can Exert No Control Over Price Because

question 4

Multiple Choice

A price-taking firm can exert no control over price because

• A)the firm's demand curve is downward sloping.
• B)of a lack of substitutes for the product.
• C)the firm's individual production is insignificant relative to total production in the industry.
• D)no other firms make a product that is nearly identical to its product.

---

Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit, where no single firm has market power.

Variable Cost

Expenses that fluctuate with the level of output or business operations, contrasting with fixed costs.

Fixed Cost

Costs that do not change with the level of output produced, such as rent, salaries, and insurance premiums.

Economic Profit

The difference between total revenue and total economic costs (including both explicit and implicit costs), reflecting a firm's financial performance.