A perfectly competitive firm is a price taker.This implies that:
A)price does not change in a perfectly competitive market.
B)price is not determined by supply and demand in a competitive market.
C)price only changes when market conditions change.
D)output of a firm is the only factor that can change prices.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, prices are determined by the overall conditions of supply and demand. Individual firms are price takers, meaning they accept the market price as given. When market conditions change, such as shifts in overall supply or demand, the equilibrium price will change accordingly. Choices A, B, and D misrepresent the dynamics of price determination in perfectly competitive markets.

A Perfectly Competitive Firm Is a Price Taker