If the demand and marginal revenue curves confronting firm A are identical, it may be concluded that firm A is a
A) monopolistic competitor.
B) price taker.
C) price searcher.
D) monopolist.

Question

Quizplus · Accepted Answer

A firm that is a price taker has no control over the price it charges, but rather takes the market price as given. If the demand and marginal revenue curves are identical, it implies that the firm is facing a perfectly elastic demand, which is characteristic of a perfectly competitive market, where firms are price takers. Therefore, the best choice is B.

If the Demand and Marginal Revenue Curves Confronting Firm a Are