A firm that faces a downward sloping demand curve is
A) a price taker.
B) a price provider.
C) a price searcher.
D) a price creator.

Question

Quizplus · Accepted Answer

A firm that faces a downward sloping demand curve has some degree of market power, which means they can influence the price. They are not a price taker (A) who must accept the market price, nor a price provider (B) who sets the price without considering the market conditions. Therefore, the best choice is C, which indicates that the firm is a price searcher, meaning they have to search for the optimal price that maximizes their profit while considering the market conditions. D is not a relevant choice as the firm cannot create the market demand or the market price.

A Firm That Faces a Downward Sloping Demand Curve Is