The factors stemming from competition determine the exact price each firm will quote.That is,when faced with the realities of competition,the price any specific firm will quote will be governed largely by its need for business and by what it thinks its competitors will quote,not by costs or profits.

Question

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This statement correctly describes the impact of competition on pricing decisions. Firms consider their need for business and what their competitors are likely to quote when determining their own prices, rather than just focusing on costs or profits.

The Factors Stemming from Competition Determine the Exact Price Each