Danny Sever owns an avocado grove and sells his avocados to wholesalers. Danny has absolutely no ability to select the price. We know then that he
A) will go out of business because price will end up being lower than his costs
B) is a price-maker
C) is in a monopolistically competitive industry
D) cannot maximize profit
E) has a horizontal individual demand curve

Question

Quizplus · Accepted Answer

Danny's situation, where he has no ability to select the price, indicates that he is a price-taker in a perfectly competitive market. In such markets, individual sellers face a horizontal demand curve, meaning the price is determined by the market, and sellers can sell any quantity they produce at the market price.

Danny Sever Owns an Avocado Grove and Sells His Avocados