If a perfectly competitive market involves many firms selling identical products, then, in the face of such competition,
A) each of these firms must act as a price-maker.
B) each of these firms must act as a price-taker.
C) collusion amongst them will most often result.
D) demand curves can become kinked in appearance.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms sell identical products and there are many sellers, meaning no single firm has control over the market price. Therefore, each firm must accept the market price as given, making them price-takers. They cannot influence the price due to the high level of competition and the substitutability of the products.

If a Perfectly Competitive Market Involves Many Firms Selling Identical