Question

All firms in an industry are price takers: Select one:

a. each firm can sell at the price it wants to charge, provided it is not too different from the prices other firms are charging.
b. the market sets the price, and each firm can take it or leave it by setting a different price.
c. each firm takes the market price as given for its output level, recognizing that the price will change if it alters its output significantly.
d. an individual firm cannot alter the market price even if it doubles its output.

Answer 1

Answer: Option B

Step-by-step explanation: In simple words, perfect competition refers to a market structure in which there are large numbers of buyers and sellers each operating at a minor level in the market. Due to high number of participants and low level of operations no firm can individually affect the price.

In such a structure the prices are determined by the market forces of demand and supply.

Hence the correct option is B .