The usefulness of the price-taker model requires that the firm's decision makers
A) act to maximize their total revenue and fully understand marginal costs and marginal revenues.
B) be able to draw accurate marginal cost and marginal revenue curves.
C) place the social interest of the economy above their individual self interests.
D) seek to maximize the profits of the firm.

Question

Quizplus · Accepted Answer

The price-taker model assumes firms are in a perfectly competitive market where they aim to maximize profits by equating marginal cost to market price, which is their marginal revenue.

The Usefulness of the Price-Taker Model Requires That the Firm's