If a Firm Is a Price Taker,then the Demand Curve

question 181

Multiple Choice

If a firm is a price taker,then the demand curve it faces is perfectly

• A)elastic and above its marginal revenue curve
• B)elastic and lies on top of its marginal revenue curve
• C)elastic and below its marginal revenue curve
• D)inelastic and above its marginal revenue curve
• E)inelastic and the same as its marginal revenue curve

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved due to market inefficiencies.

Consumer Surplus

The difference in planned versus actual spending by consumers on a good or service.

Price Discrimination

A pricing strategy where a firm charges different prices for the same product or service to different consumers, based on their ability to pay, in order to maximize profits.

Privatizing

The act of moving control and ownership from the government to private entities, including businesses, enterprises, agencies, or public services.