[amp_mcq option1=”The individual firm must have fewer than 10 employees” option2=”The individual firm faces a downward-sloping demand curve” option3=”The individual firm has assets less than Rs. 20 lakhs” option4=”The individual firm is unable to affect market price through its output decisions” correct=”option4″]
The correct answer is D. The individual firm is unable to affect market price through its output decisions.
A price-taking firm is a firm that cannot affect the market price of its product. This is because the firm is one of many firms in the market, and each firm produces a small fraction of the total output. As a result, the firm’s output decisions have a negligible impact on the market price.
Option A is incorrect because the number of employees a firm has does not necessarily determine whether it is a price-taking firm. For example, a large firm with many employees may be a price-taker if it is one of many firms in the market.
Option B is incorrect because the demand curve a firm faces does not necessarily determine whether it is a price-taking firm. For example, a firm with a downward-sloping demand curve may be a price-taker if it is one of many firms in the market.
Option C is incorrect because the assets a firm has does not necessarily determine whether it is a price-taking firm. For example, a firm with few assets may be a price-taker if it is one of many firms in the market.