A firm can choose a quantity of output, and the price is then determined by
A)the government.
B)the supply schedule.
C)consumers' demand.
D)the average cost.

Question

Quizplus · Accepted Answer

The price of output is determined by the consumers' demand. This is because consumers are the ones who ultimately decide whether or not they are willing to pay a certain price for a product. If a firm produces too much of a product, it may not be able to sell it all and will have to lower its price to attract buyers. On the other hand, if there is high demand for a product and the supply is limited, the firm can charge a higher price. Therefore, consumers' demand is the determining factor in the price of output.

A Firm Can Choose a Quantity of Output, and the Price