A supplier in a perfectly competitive market is characterized by all but which of the following?
A)It can influence the price of its product.
B)It produces such that marginal cost equals price.
C)It can sell all it wants to at the prevailing market price.
D)It produces a positive amount in the short run if it can recover variable costs.
E)None of the above are incorrect.

Question

Quizplus · Accepted Answer

A supplier in a perfectly competitive market cannot influence the price of its product as it is a price taker and has no market power. The market determines the price, and the supplier simply responds by adjusting its output level to maximize profits.

A Supplier in a Perfectly Competitive Market Is Characterized by All