If a Single Firm in a Price-Taker Market Lowers Its

question 248

Multiple Choice

If a single firm in a price-taker market lowers its price below the market equilibrium price,

• A) it will get a larger share of the market.
• B) it will lose revenue without increasing the quantity it can sell.
• C) other firms will lower their prices.
• D) other firms will be driven out of the industry.

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Definitions:

Stock

Ownership shares in a corporation, representing a claim on part of the corporation's assets and earnings.

Stockbroker

A person licensed to assist investors in buying and selling securities for a commission.

Securities Analyst

A financial professional who conducts research, analyzes securities, and provides investment recommendations based on their findings.

Market Maker

A firm or individual who actively quotes two-sided markets, providing offers to buy and sell securities, thus facilitating liquidity in the markets.