The Assumption That Each Firm in a Perfectly Competitive Market

question 218

Multiple Choice

The assumption that each firm in a perfectly competitive market is a price taker basically means that ________.

• A) market price is independent of the level of industry output
• B) each firm's supply curve is perfectly elastic
• C) the firm can take any price it wants to choose and still sell all its output
• D) changes in the output of an individual firm do not affect the market price

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Definitions:

Inductive Reasoning

A method of reasoning in which general principles are inferred from specific observations, moving from particular instances to broader generalizations.

Deductive Reasoning

involves drawing specific conclusions from general premises or known facts, following a logical progression from a general statement to a specific conclusion.

Deductive Reasoning

A logical process in which a conclusion is based on the concordance of multiple premises that are generally assumed to be true.