A Firm Is a Price Taker If It

question 50

Multiple Choice

A firm is a price taker if it

• A)always sells its output at the industry-determined price.
• B)takes consumer demand into consideration in setting its price.
• C)takes its production costs into consideration in setting its price.
• D)uses a pricing strategy to gain market share.

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Definitions:

Transfer Price

The price charged for goods or services transferred between departments or divisions within the same company as part of the internal sales process.

Opportunity Cost

The sacrifice of possible benefits from other options when selecting a specific one.

Standard Variable Cost

The anticipated cost of variable inputs (like labor and materials) for producing one unit of product or service under standard operating conditions.

Profit Centre

A business unit or department within an organization that is responsible for generating its own revenue and profits, allowing for easier tracking of financial performance.