Question

In: Economics

If a firm is able to set price, Question 4 options: A) it sells its output...

If a firm is able to set price,

Question 4 options:

A)

 it sells its output at a constant price.

B)

 it faces a downward-sloping demand curve.

C)

 it is a monopoly.

D)

 its marginal revenue is constant.

Solutions

Expert Solution

Answer is option B)

if a Firm is able to set it's price , then MR won't be Constant

Bcoz MR is Constant for a price taking perfecfly Competitive Firm, D is false

Constant price is characteristic of perfect competition

The firm need not to be necessarily a Monopoly , bcoz even in oligopoly, Monopolistic Competition, a firm can set it's own price

But when firm sets their prices, they necessarily face downwards sloping demand curve

While demand Curve is horizontal in Perfect Competition

Rahul Sunny answered 2 years ago
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