Which of the following statements is true?
A)Price-taking behavior by competitive firms does not have an analogy in the theory of the consumer.
B)The more competitive a market, the more prices are expected to vary between firms in the market.
C)Buyers and sellers individually set prices.
D)A competitive firm is a price-taker.
E)A competitive firm is a price-maker.

Question

Quizplus · Accepted Answer

A competitive firm is considered a price-taker because they have no control over the market price and must accept the prevailing price in the market. This is in contrast to a price-maker who has the ability to influence market price through their actions. Options A, B, and C are incorrect as they do not accurately describe price-taking behavior or the competitive market structure.

Which of the Following Statements Is True