If a firm is a price taker, then the demand curve for the firm's product is
A) equal to the total revenue curve.
B) perfectly inelastic.
C) perfectly elastic.
D) unit elastic.

Question

Quizplus · Accepted Answer

If a firm is a price taker, it means it has no influence over the market price and must accept the prevailing market price. This implies that the firm faces a perfectly elastic demand curve, where any increase in price will cause consumers to switch to substitute products, and any decrease in price will not increase the quantity demanded. Therefore, the demand curve for the firm's product is perfectly elastic.

If a Firm Is a Price Taker, Then the Demand