Firms That Exhibit Price-Taking Behavior

question 58

Multiple Choice

Firms that exhibit price-taking behavior

• A) wait for other firms to set price, take it as given, and charge a higher price.
• B) have outputs that are too small to influence market price and thus take it as given.
• C) take pricing behavior in their own hands.
• D) are independently capable of setting price.

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Definitions:

Factory Overhead

All indirect costs incurred during the manufacturing process, excluding direct materials and direct labor.

Factory Rent

Factory rent refers to the cost associated with leasing a premise for manufacturing operations, classified as an overhead expense in accounting.

Prime Costs

The sum of expenses for the raw materials and labor directly involved in the manufacturing of a product.

Conversion Costs

The aggregate expenditure on direct labor and manufacturing overheads used for turning raw materials into final products.