If All Firms in an Industry Are Price Takers

question 27

Multiple Choice

If all firms in an industry are price takers:

• A)each firm can sell at the price it wants to charge,provided it is not too different from the prices other firms are charging.
• B)each firm takes the market price as given for its output level,recognizing that the price will change if it alters its output significantly.
• C)an individual firm cannot alter the market price even if it doubles its output.
• D)the market sets the price,and each firm can take it or leave it by setting a different price.

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Definitions:

Minimum Risk Portfolios

Investment strategies that aim to minimize the overall risk of a portfolio through diversification and asset allocation.

Expected Returns

The anticipated profit or loss from an investment over a specific period.

High-Beta Stock

Stocks with a beta value higher than 1, indicating they are more volatile than the market as a whole.

Historical Beta

A measure of an asset's volatility in relation to the market, based on past price movements, indicating its risk compared to the market.