When Firms Are Said to Be Price Takers, It Implies

question 204

Multiple Choice

When firms are said to be price takers, it implies that if a firm raises its price,

• A)buyers will go elsewhere.
• B)buyers will pay the higher price in the short run.
• C)competitors will also raise their prices.
• D)firms in the industry will exercise market power.

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Definitions:

Activity Variance

The difference between the actual and budgeted amount of activity, often used in variance analysis to identify and manage deviations in performance.

Direct Labor

The wages or costs associated with workers who are directly involved in the production of goods or services.

Activity Level

The volume of production or the rate of operations in a business activity.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for more precise cost control.