In Competitive Price-Taker Markets, If One Firm Raises Its Price

question 155

Multiple Choice

In competitive price-taker markets, if one firm raises its price,

• A) others will follow
• B) that firm will increase its revenues
• C) that firm will lose revenues because other firms will not follow
• D) all consumers will be adversely affected
• E) the market demand curve will shift

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Definitions:

Overconfidence

The state of being more confident than is warranted by the situation, often leading to taking undue risks.

Validity

The quality of being logically or factually sound; the extent to which a concept, conclusion, or measurement is well-founded and corresponds accurately to the real world.

Projection

A psychological defense mechanism where individuals attribute their own undesirable feelings, motivations, or characteristics to other people.

Social Group

A collection of individuals who interact with each other, share similar characteristics, and collectively have a sense of unity or identity.