Because a Competitive Firm Is a Price Taker, It Faces

question 129

Multiple Choice

Because a competitive firm is a price taker, it faces a demand curve that is:

• A) perfectly inelastic.
• B) relatively inelastic.
• C) relatively elastic.
• D) perfectly elastic.

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Definitions:

Yield Management Pricing

A pricing strategy that adjusts prices based on changes in supply and demand, commonly used in the airline and hotel industries.

Skimming Pricing

A pricing strategy where a product is initially sold at a high price to target customers who are less price-sensitive, before gradually lowering the price.

Prestige Pricing

A pricing strategy where prices are set higher than average to project exclusivity, quality, or luxury, appealing to consumers' status and prestige.

Standard Markup Pricing

Adding a fixed percentage to the cost of all items in a specific product class.