A Firm That Is a Price Taker Will Not Sell

question 123

Multiple Choice

A firm that is a price taker will not sell any of its product for less than the equilibrium price because

• A)it is against the law to do this.
• B)it can sell all it can produce at the equilibrium price.
• C)this would invite competition from outside the market and end up reducing the profits of the firm.
• D)this would be breaking the cartel agreement that price-taker firms often enter into.

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Definitions:

Budget Surplus

A financial situation where a government's revenues exceed its expenditures over a specific timeframe.

Military Spending

The amount of financial resources dedicated by a nation to maintaining and equipping its armed forces and defense activities.

Malthusian Theory

A theory proposed by Thomas Malthus suggesting that population growth will outpace agricultural production, leading to widespread famine and disaster.

Population Growth

The increase in the number of individuals in a population, typically measured as a percentage change over time.