Which of the Following Correctly Explains Why Sellers in a Perfectly

question 87

Multiple Choice

Which of the following correctly explains why sellers in a perfectly competitive market are price takers?

• A) There are few sellers, and so they have the power to take whatever price they want.
• B) There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process.
• C) Sellers in a competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price.
• D) Individual buyers in a competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers.

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Definitions:

Supervisors

Individuals in an organization responsible for overseeing the work of employees and managing their performance.

Volume Variance

The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual units produced.

Factory Overhead Cost

All of the costs of producing a product except for direct materials and direct labor.

Normal Capacity

The average level of operational output or activity that a company can sustain over a long period, considering fluctuations in demand and maintenance schedules.