{"id":52162,"date":"2024-04-15T23:35:15","date_gmt":"2024-04-15T23:35:15","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=52162"},"modified":"2024-04-15T23:35:15","modified_gmt":"2024-04-15T23:35:15","slug":"price-taking-firms-i-e-firms-that-operate-in-a-perfectly-competitive-market-are-said-to-be-small-relative-to-the-market-which-of-the-following-best-describes-this-smallness","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/price-taking-firms-i-e-firms-that-operate-in-a-perfectly-competitive-market-are-said-to-be-small-relative-to-the-market-which-of-the-following-best-describes-this-smallness\/","title":{"rendered":"Price-taking firms i.e., firms that operate in a perfectly competitive market, are said to be &#8216;small&#8217; relative to the market. Which of the following best describes this smallness?"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;The individual firm must have fewer than 10 employees&#8221; option2=&#8221;The individual firm faces a downward-sloping demand curve&#8221; option3=&#8221;The individual firm has assets less than Rs. 20 lakhs&#8221; option4=&#8221;The individual firm is unable to affect market price through its output decisions&#8221; correct=&#8221;option4&#8243;]<!--more--><\/p>\n<p>The correct answer is D. The individual firm is unable to affect market price through its output decisions.<\/p>\n<p>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&#8217;s output decisions have a negligible impact on the market price.<\/p>\n<p>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.<\/p>\n<p>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.<\/p>\n<p>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.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;The individual firm must have fewer than 10 employees&#8221; option2=&#8221;The individual firm faces a downward-sloping demand curve&#8221; option3=&#8221;The individual firm has assets less than Rs. 20 lakhs&#8221; option4=&#8221;The individual firm is unable to affect market price through its output decisions&#8221; correct=&#8221;option4&#8243;]<\/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-52162","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Price-taking firms i.e., firms that operate in a perfectly competitive market, are said to be &#039;small&#039; relative to the market. Which of the following best describes this smallness?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/price-taking-firms-i-e-firms-that-operate-in-a-perfectly-competitive-market-are-said-to-be-small-relative-to-the-market-which-of-the-following-best-describes-this-smallness\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Price-taking firms i.e., firms that operate in a perfectly competitive market, are said to be &#039;small&#039; relative to the market. 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Which of the following best describes this smallness?","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/price-taking-firms-i-e-firms-that-operate-in-a-perfectly-competitive-market-are-said-to-be-small-relative-to-the-market-which-of-the-following-best-describes-this-smallness\/","og_locale":"en_US","og_type":"article","og_title":"Price-taking firms i.e., firms that operate in a perfectly competitive market, are said to be 'small' relative to the market. 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