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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?
- a)The individual firm must have fewer than 10 employees.
- b)The individual firm faces a downward-sloping demand curve.
- c)The individual firm has assets of less than Rs. 20 lakh.
- d)The individual firm is unable to affect market price through its output decisions.
Correct answer is option 'D'. Can you explain this answer?
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Price-taking firms, i.e., firms that operate in a perfectly competitiv...
Explanation:
Price-taking firms operate in a perfectly competitive market where they have no market power and are unable to affect the market price through their output decisions. This is because there are many other firms in the market producing the same product and consumers have perfect information about the market. Therefore, the market price is determined by the forces of supply and demand and each individual firm has to accept the prevailing market price.
The smallness of price-taking firms is related to their inability to affect the market price. This means that they are relatively small compared to the entire market. The size of the firm is not determined by the number of employees or the value of assets, but rather by the firm's ability to influence the market price.
In summary, the smallness of price-taking firms in a perfectly competitive market means that they are unable to affect the market price through their output decisions.
Price-taking firms operate in a perfectly competitive market where they have no market power and are unable to affect the market price through their output decisions. This is because there are many other firms in the market producing the same product and consumers have perfect information about the market. Therefore, the market price is determined by the forces of supply and demand and each individual firm has to accept the prevailing market price.
The smallness of price-taking firms is related to their inability to affect the market price. This means that they are relatively small compared to the entire market. The size of the firm is not determined by the number of employees or the value of assets, but rather by the firm's ability to influence the market price.
In summary, the smallness of price-taking firms in a perfectly competitive market means that they are unable to affect the market price through their output decisions.
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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?a)The individual firm must have fewer than 10 employees.b)The individual firm faces a downward-sloping demand curve.c)The individual firm has assets of less than Rs. 20 lakh.d)The individual firm is unable to affect market price through its output decisions.Correct answer is option 'D'. Can you explain this answer?
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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?a)The individual firm must have fewer than 10 employees.b)The individual firm faces a downward-sloping demand curve.c)The individual firm has assets of less than Rs. 20 lakh.d)The individual firm is unable to affect market price through its output decisions.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about 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?a)The individual firm must have fewer than 10 employees.b)The individual firm faces a downward-sloping demand curve.c)The individual firm has assets of less than Rs. 20 lakh.d)The individual firm is unable to affect market price through its output decisions.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for 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?a)The individual firm must have fewer than 10 employees.b)The individual firm faces a downward-sloping demand curve.c)The individual firm has assets of less than Rs. 20 lakh.d)The individual firm is unable to affect market price through its output decisions.Correct answer is option 'D'. Can you explain this answer?.
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