[amp_mcq option1=”The firm is a price-taker” option2=”The firm cannot influence the price” option3=”The amount the firm supplies to the market is small relative to the total supply” option4=”All of the above” correct=”option4″]<\/p>\n
The correct answer is: D. All of the above.<\/p>\n
A perfectly elastic demand curve is a horizontal line, which means that the firm can sell as much or as little as it wants at the market price. This means that the firm is a price-taker, as it has no control over the price of its product. The firm cannot influence the price because the demand for its product is perfectly elastic. If the firm were to raise its price, consumers would simply buy from other firms that are selling the same product at a lower price. Conversely, if the firm were to lower its price, it would not be able to sell any more units, as consumers would already be buying all of the product that they want at the market price.<\/p>\n
The amount the firm supplies to the market is small relative to the total supply because the firm is a price-taker. The firm cannot influence the price, so it must accept the market price and produce whatever quantity of output is demanded at that price. The amount of output that the firm produces is therefore determined by the market demand curve, not by the firm’s own costs or preferences.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”The firm is a price-taker” option2=”The firm cannot influence the price” option3=”The amount the firm supplies to the market is small relative to the total supply” option4=”All of the above” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-43923","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n