Price Is Taken to Be a "Given" by an Individual

question 136

Multiple Choice

Price is taken to be a "given" by an individual firm selling in a purely competitive market because

• A) the firm's demand curve is downward-sloping.
• B) there are no good substitutes for the firm's product.
• C) each seller supplies a negligible fraction of the total market.
• D) product differentiation is reinforced by extensive advertising.

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Definitions:

Multi-Plant Firms

Companies that operate more than one production facility, often to increase output capacity or serve different geographic markets more efficiently.

Principal-Agent Framework

A theory that explores the challenges in motivations and conflicts of interest between a principal (such as an owner) and an agent (such as an employee) acting on the principal's behalf.

Incentive Compatibility

A concept in economics and game theory that occurs when the incentives align with the desired outcomes, ensuring that participants act in a way that leads to an optimal outcome for all involved.

Supervise

The act of overseeing, directing, or managing activities and tasks of individuals or groups to ensure objectives are met.