When We Say That a Firm Is a Price Taker

question 8

Multiple Choice

When we say that a firm is a price taker, we are indicating that the

• A) firm takes the price established in the market then tries to increase that price through advertising.
• B) firm can change output levels without having any significant effect on price.
• C) demand curve faced by the firm is perfectly inelastic.
• D) firm will have to take a lower price if it wants to increase the number of units that it sells.

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Definitions:

Complexity

The degree to which many different types of activities occur in the organization.

Formalization

The process of establishing official procedures and rules within an organization.

Specialization

The process of focusing on a narrow area of expertise, enhancing efficiency and proficiency in performing specific tasks or roles.

Hierarchy

A system or organization in which people or groups are ranked one above the other according to status or authority.