An individual firm in a perfectly competitive market

Select one:

a. is very concerned with its competitors' marketing decisions.

b. cannot affect market price.

c. may be able to increase its price without losing sales.

d. will decrease the price of its output if it produces too much.

Solutions

Expert Solution

b. cannot affect market price.

An individual firm in a perfectly competitive market cannot affect market price.

Explanation to the answer -

In a perfectly competitive market, the price is determined by the intersection of market demand and market supply. No buyer or seller has any influence over the price. Here industry is the price maker. Individual firms are price takers and they must accept that market price for their outputs, which has been determined by the intersection of market demand and supply.

As there are so many buyers and sellers in the market, an individual firm can not affect the market or market price.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

5) In a perfectly competitive market the demand curve facing the INDIVIDUAL firm is: a. perfectly...

5) In a perfectly competitive market the demand curve facing the INDIVIDUAL firm is: a. perfectly elastic b. perfectly inelastic c. relatively elastic d. relatively inelastic 6) Any profit maximizing firm will maximize its economic profit or minimize its economic loss where: a. the marginal revenue from the last unit produced equals its marginal cost b. the marginal cost from the last unit produced is greater than its marginal revenue c. the marginal revenue from the last unit produced equals...

which of the following is false. a) an individual firm in a perfectly competitive market cannot...

which of the following is false. a) an individual firm in a perfectly competitive market cannot affect the price it receives for its output by changing the level of its output. b) in a perfectly competitive market, the price is determined by the combined output decisions of all firms in a market. c) a perfectly competitive firm has a downwards sloping marginal revenue curve d) for a perfectly competitive firm, the optimal quantity is determined by the following relationship MR=MC=P

The short-run supply curve for an individual firm operating in a perfectly competitive market is: a....

The short-run supply curve for an individual firm operating in a perfectly competitive market is: a. the marginal cost curve at or above the average total cost curve. b. the marginal cost curve at or above the average variable cost curve. c. the marginal revenue curve at or above the average total cost curve. d. the marginal revenue curve at or above the average variable cost curve.

The following information is relevant for an individual firm operating in a perfectly competitive market. Output...

The following information is relevant for an individual firm operating in a perfectly competitive market. Output 30 Variable Cost $800 Fixed Cost $1,200 Marginal Cost $60 Price $60 What will be the firm's production decision in the short-run? Exit Shutdown Other firms will enter into the market Operate A fixed cost is a cost that: exists only in the long-run. does not vary with output. changes based on the number of workers. varies with output. True or False: A reason...

The demand curve for an individual perfectly competitive firm:

MicroEcon 7&822.The demand curve for an individual perfectly competitive firm:A)is a downward sloping demand curve.B)is perfectly elastic.C)is perfectly inelastic.D)is equal to the firms average variable cost curve.23.In a perfectly competitive market, individual firms set:A)prices and quantities.B)neither prices nor quantities.C)quantities but not prices.D)prices but not quantities.24.Which industry best illustrates a perfectly competitive market?A)automobile industryB)soft drink industryC)public utility25.Profit maximizing firms will always operate where:A)MC = MR.B)MC > MR.C)MC < MR.D)It will vary from firm to firm.26.When a firm experiences economies of scale:A)average...

Either graphically or descriptively, describe how an individual firm in a perfectly competitive market with other...

Either graphically or descriptively, describe how an individual firm in a perfectly competitive market with other identical firms responds to an inward shift (decrease) in the demand curve for their product and the short run and long run implications this has for the market price and quantity. Additionally, illustrate either graphically or descriptively how the elasticity of supply for both firms and the market typically changes from the short-run to the long-run.

Which of the following is NOT a characteristic of a perfectly competitive market? A. An individual...

Which of the following is NOT a characteristic of a perfectly competitive market? A. An individual producer can lower the market price if it is advantageous for him/her B. Suppliers are price takers C. Neither producers nor consumers are price takers D. Demanders are price takers.

1: Demand facing an individual, perfectly competitive firm is: a. perfectly inelastic at the quantity the...

1: Demand facing an individual, perfectly competitive firm is: a. perfectly inelastic at the quantity the firm chooses to produce. b. perfectly inelastic at the quantity determined by market forces. c. perfectly elastic at the price the firm chooses to charge. d. perfectly elastic at the price determined by market forces. 2: At the point at which P= MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its ATC = $110. This firm should...

Perfectly competitive market. An individual firm has the following cost function: TC = 36 + 2q...

Perfectly competitive market. An individual firm has the following cost function: TC = 36 + 2q +q2. Find the firm’s supply curve. If there are 100 identical firms in the market, what is the market supply curve? In the long run, how many units would each firm produce? What is the price in the long run? What is each firm’s profit? Show this. If the market demand= Qd = 614 - p, how many firms would be in the market?

Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR=MC at...

Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR=MC at 1200 units of output. At 1200 units, atc is $23 and avc is $18. The best policy for this firm is to ___ in the short run. Also, this firm earns ___ of ___ if it produces and sells 1200 units. a.shut down, losses, 15,600 b.shut down, losses, 9,600 c.continue to produce, losses, $15,600 d.continue to produce, profits, $15,600 Ultimately, market supply curves are...

Subjects