In the pumpkin-growing firm example in the text, the firm is a price-taker because
A)the firm does not have the ability to charge whatever price it wants to charge.
B)the firm is not a profit-maximizing firm.
C)price setting is too complicated for an individual firm.
D)the market for pumpkins is a competitive market.
E)it faces no demand.

Question

Quizplus · Accepted Answer

The fact that the pumpkin-growing firm is operating in a competitive market indicates that it is a price-taker, meaning that it has no control over the market price and must take the prevailing price as given. Therefore, option D is the correct answer. Options A, B, C, and E are incorrect because they do not accurately describe the reason why the firm is a price-taker.

In the Pumpkin-Growing Firm Example in the Text, the Firm