If a firm has no ability to select the price of its product, it:

Question

Quizplus · Accepted Answer

A firm with no ability to select the price of its product is a price-taker, which means it has to accept the market price determined by the interaction of supply and demand. In this case, the firm's individual demand curve is horizontal because it cannot sell any additional units at a price higher than the market price. While the firm cannot set its price, it can still maximize profit by producing at the quantity where marginal revenue equals marginal cost. Therefore, options A, B, and C are incorrect.

If a Firm Has No Ability to Select the Price