A firm that has the ability to control to some degree the price of the product it sells
A) is also able to dictate the quantity purchased.
B) faces a demand curve that is inelastic throughout the range of market demand.
C) is a price maker.
D) faces a perfectly inelastic demand curve.

Question

Quizplus · Accepted Answer

A firm that has the ability to control the price of the product it sells is known as a price maker. They can set the price at a level that maximizes profit for the company. Option A is incorrect because the firm may not be able to dictate the quantity purchased as there may be substitutes available in the market. Option B is also incorrect as the demand curve could be elastic in some parts of the market demand. Option D is also incorrect as a perfectly inelastic demand curve means that any price increase would result in no change in quantity demanded, which is unrealistic in most scenarios.

A Firm That Has the Ability to Control to Some