Why Does a Firm in a Competitive Industry Charge the Market

question 213

Multiple Choice

Why does a firm in a competitive industry charge the market price?

• A)If a firm charges less than the market price, it loses potential revenue.
• B)If a firm charges more than the market price, it loses all its market power.
• C)The firm can only sell limited number of units of output, so it wants to sell at the market price in order to lower its costs.
• D)All of the above are correct.

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Definitions:

Ultimate Decision Maker

The person or entity with the final authority to make a decision, often in a business or organizational context.

Foreign Government

The governing body of a nation-state or territory outside one's own country.

Diplomatic Recognition

The acknowledgment by one state of another's sovereignty and government, establishing formal diplomatic relations.

Nonpartisan

Not biased or linked to any political party, often referring to activities or organizations that aim for fair and impartial judgment.