In the Price-Taker Model, What Impact Does the Individual Firm

question 16

Multiple Choice

In the price-taker model, what impact does the individual firm have on the price of its product?

• A) The firm must accept the price determined in the market if it is going to sell its product.
• B) The firm may raise or lower its price to a small extent, but sales revenues will tend to be the same regardless of price.
• C) The firm may raise its price and, thereby, increase its revenues.
• D) The firm may raise or lower its price to a considerable extent, but sales revenues will tend to be the same regardless of price.

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Definitions:

Economics

The social science concerned with the production, distribution, and consumption of goods and services.

Sociology

The study of the development, structure, and functioning of human society.

Time

A dimension in which events can occur in sequence from the past through the present to the future, also a critical element in economic models affecting production, consumption, and investments.

Economics

The social science that studies how individuals, governments, and nations make choices on allocating resources to satisfy their wants and needs.