Which of the Following Statements Is (Are) TRUE of Price-Taking

question 140

Multiple Choice

Which of the following statements is (are) TRUE of price-taking firms?
I. ΔTR/ΔQ = P = MR
II. Price takers must lower their price to sell additional units of output because demand curves slope downward.
III. If a price taker decides to increase output, the market price will decrease.
IV. Examples of price takers include McDonald's, Burger King, Wendy's, and SONIC Drive-in.

• A) II and III
• B) I, II, III, and IV
• C) I
• D) II and IV

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Definitions:

Net Capital Outflow

The difference between the domestic country's investment abroad and foreign investments within the country.

Real Interest Rate

The interest rate adjusted for inflation, reflecting the real cost of borrowing and the real yield to investors.

U.S. Interest Rate

The benchmark interest rate set by the Federal Reserve in the United States, influencing the borrowing and lending rates across the economy.

Net Capital Outflow

Net capital outflow refers to the difference between the domestic investment in foreign assets and the foreign investment in domestic assets over a particular period.