Question

When a firm is a price-taking firm,

the price of the product it sells is determined by the intersection of the market demand and supply curves for the product.

raising the price of the product above the market-determined price will cause sales to fall nearly to zero.

many other firms produce a product that is identical to the output produced by the rest of the firms in the industry.

all of the above

Answer 1

The correct answer is (d) all of the above

Price taking firm is a firm which charges price determined by a market i.e. Price at which Market supply equals market demand and hence has no control over price.

Thus option (a) is correct.

As discussed above that Price taking firm has no control over price and because of this if it charges price greater than Price determined by the market then its sale will be nearly 0.

Hence, option (b) is also correct

As discussed above Price taking firm has no control over price, If firms are not selling identical product(like a perfect competitive firm) then there is product differentiation and which results in firms having some market power. That why many other firms produce a product that is identical to the output produced by the rest of the firms in the industry.

So, option (c) is also correct.

Thus all of the above are correct.

Hence, the correct answer is (d) all of the above