Which of the following statements regarding a price-taking firm is correct?

Question

Quizplus · Accepted Answer

A price-taking firm is a firm that has no market power and must accept the price set by the market. Therefore, it faces a perfectly elastic demand curve, meaning that it can sell as much output as it wants at the going market price. In this situation, the firm's demand curve, average revenue curve, and marginal revenue curve are all the same, and they are equal to the market price. Therefore, the correct statement is that demand, price, average revenue, and marginal revenue are all equal in a price-taking firm, which is represented by option C.

Which of the Following Statements Regarding a Price-Taking Firm Is