A price-setting firm

Question

Quizplus · Accepted Answer

A price-setting firm can use its market power to either lower or raise the price of its product based on various factors such as demand, competition, and production costs. This can result in selling more units at a lower price or fewer units at a higher price depending on the situation. The ability to set prices also indicates that the product is differentiated or the market is restricted, which gives the firm some power over its pricing strategy. Therefore, all of the above options are valid for a price-setting firm.

A Price-Setting Firm