If a firm happened to be the only seller of a particular product,it might behave as a price taker as long as

Question

Quizplus · Accepted Answer

If there is free entry and exit, other firms can easily enter the market and start selling the same product. This will lead to competition and the monopolistic firm will no longer be the only seller. Therefore, the firm cannot behave as a price taker in the long run. However, in the short run, the firm may behave as a price taker if the other conditions such as full information and low transaction costs are also met.

If a Firm Happened to Be the Only Seller of a Particular