When we say that a firm is a price taker, we are indicating that the
A) firm takes the price established in the market then tries to increase that price through advertising.
B) firm can change output levels without having any significant effect on price.
C) demand curve faced by the firm is perfectly inelastic.
D) firm will have to take a lower price if it wants to increase the number of units that it sells.

Question

Quizplus · Accepted Answer

A price taker firm operates in a perfectly competitive market where it cannot influence the market price and can sell any quantity of output at the market price without affecting it.

When We Say That a Firm Is a Price Taker