If a firm can raise market price by reducing its output,then
A)It has no market power.
B)It faces a downward-sloping demand curve.
C)It is a price taker.

Question

Quizplus · Accepted Answer

If a firm can raise market price by reducing its output, it means that it faces a downward-sloping demand curve. This is because a downward-sloping demand curve implies that as the quantity of output reduces, the price of the product increases. Thus, the firm has the market power to affect the price of its product by changing its output. However, if a firm is a price taker, it cannot affect the price of its product, and if it has no market power, it cannot affect the market price either.

If a Firm Can Raise Market Price by Reducing Its