An imperfectly competitive producer:
A) has no say in the price of its product and is, essentially, a price taker.
B) faces a horizontal demand curve.
C) supplies its products up to the quantity where the marginal revenue from selling one more product is equal to the marginal cost of producing that last unit.
D) sets the price where the marginal revenue equals the average cost.

Question

Quizplus · Accepted Answer

An imperfectly competitive producer faces a downward-sloping demand curve, indicating that it has some market power to affect the price of its product. Therefore, it cannot be a price taker (Option A) or face a horizontal demand curve (Option B). The producer aims to maximize its profit by producing up to the quantity where the marginal revenue equals the marginal cost (Option C), not the average cost (Option D).

An Imperfectly Competitive Producer