Which of the following statements is true for both General Motors and a locally-owned restaurant?
A) Both are perfect competitors.
B) Both confront perfectly elastic demand for their products.
C) Neither is able to influence the price of their products.
D) Both seek to maximize profit.
E) Both seek to maximize revenue.

Question

Quizplus · Accepted Answer

Both General Motors and a locally-owned restaurant seek to maximize profit. However, they differ in their ability to influence the price of their products. General Motors may have some market power and be able to set prices, whereas a small local restaurant may have less price-setting ability and face more competition. A and B are incorrect because neither General Motors nor a locally-owned restaurant necessarily face perfect competition or perfectly elastic demand. C is incorrect because some firms may have some market power and be able to influence prices to some extent. E is incorrect because maximizing revenue may not necessarily result in maximizing profit.

Which of the Following Statements Is True for Both General