When a Firm Is a Price-Taking Firm

question 28

Multiple Choice

When a firm is a price-taking firm,

• A) the price of the product it sells is determined by the intersection of the market demand and supply curves for the product.
• B) raising the price of the product above the market-determined price will cause sales to fall nearly to zero.
• C) many other firms produce a product that is identical to the output produced by the rest of the firms in the industry.
• D) all of the above

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Definitions:

Economies of Scope

Cost advantages that enterprises obtain due to efficient resource utilization in producing a variety of products rather than specializing in a single product.

Learning by Doing

The process of gaining skill or knowledge from direct experience or practice.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, which often leads to a reduced cost per unit of output.

Diseconomies of Scope

A situation in which a single firm producing multiple products has higher costs than if each product were produced by a separate firm.