Which of the Following Statements Best Reflects a Price-Taking Firm

question 198

Multiple Choice

Which of the following statements best reflects a price-taking firm?

• A)If the firm were to charge more than the going price, it would sell none of its goods.
• B)The firm has an incentive to charge less than the market price to earn higher revenue.
• C)The firm can sell only a limited amount of output at the market price before the market price will fall.
• D)Price-taking firms maximize profits by charging a price above marginal cost.

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Definitions:

Guaranteed Amount

A specific sum assured to be paid, often in the context of insurance or investment products, regardless of variable conditions.

Lease Payments

Periodic payments made by a lessee to a lessor for the use of an asset.

Inventory Cost

The total cost incurred to acquire inventory and bring it to its current condition and location, including purchase prices, freight, and handling fees.

Operating Lease

A leasing agreement allowing the lessee to use an asset temporarily without transferring the risks and rewards of ownership.