"Perfectly competitive firms have total control over the price they set for their product." Explain why the previous statement is correct or incorrect
What will be an ideal response?
The statement is incorrect. Perfectly competitive firms are price takers, which means that they have no control over the price of their product. They must "take" the price given to them by the market as a whole, that is, they must take the price determined by the market demand and market supply.
Economics
You might also like to view...
If a one percent increase in the price of bananas leads to a one percent decrease in the quantity of bananas demanded, then the demand for bananas is
A) elastic. B) inelastic. C) unit-elastic. D) perfectly inelastic.
Economics
Economic growth is represented on a production possibilities frontier model by the production possibilities frontier
A) shifting outward. B) shifting inward. C) becoming steeper. D) becoming flatter.
Economics