In Competitive Industries Such as the Lawn-Mowing Business

question 7

Multiple Choice

In competitive industries such as the lawn-mowing business:

• A) firms set the prices for their products with little concern for the consumer.
• B) firms are considered to be price makers.
• C) market forces prevent firms from charging a higher price.
• D) the individual firms are much stronger than the market forces are.
• E) the market forces set the quantity in the market but not the prices.

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Definitions:

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in the price of that good, showing the sensitivity of quantity demanded to price changes.

Grapes

Edible berries, typically growing in clusters on a vine, used in making wine, eaten fresh, or dried to produce raisins.

Demand Function

A mathematical function showing the quantity of a good demanded at different prices.

Price Elasticity

Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price.