Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market?
A) The short-run average total costs of firms that are price takers will be constant.
B) If a price taker increased its price, consumers would buy from other suppliers.
C) Firms in a price-taker market will have to advertise in order to increase sales.
D) There are no good substitutes for the product supplied by a firm that is a price taker.

Question

Quizplus · Accepted Answer

In a competitive price-taker market, many firms sell identical products, so if one firm raises its price, consumers will switch to other suppliers offering the same product at the market price.

Which of the Following Best Explains Why a Firm in a Competitive