Which of the Following Statements Best Reflects a Price-Taking Firm

question 520

Multiple Choice

Which of the following statements best reflects a price-taking firm?

• A)The firm can sell only a limited amount of output at the market price before the market price will fall.
• B)If the firm were to charge less than the going price, it would maximize its profits and revenues.
• C)If the firm were to charge more than the going price, it would sell none of its goods.
• D)Both b and c are correct.

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Definitions:

Weighted Average

A mathematical calculation that takes into account the varying degrees of importance of the numbers it is applied to, often used in financial analysis and accounting.

Project Risk

The potential for losses or less than expected returns from a particular project due to factors such as cost overruns, delays, or changing conditions.

Pure Play Approach

A business strategy focusing solely on a single product or service to gain competitive advantage.

WACC

The Weighted Average Cost of Capital is a method used to compute a company's cost of capital, where each type of capital is assigned a weight proportional to its importance.