GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A firm is price-taker under perfect competition
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The short-run supply curve has a negative slope
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Under perfect competition a firm determine its price where AR = MR
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In perfect competitive industry a firm is in equilibrium in the short run only when its AC = AR = MR = MC
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Detailed explanation-1: -A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods.
Detailed explanation-2: -Perfect competition is a type of market where there are large number of buyers and sellers who deals in homogeneous product due to which no individual unit is able to influence the price of the product and the firms have to quote the price that prevails in the market.
Detailed explanation-3: -“In perfect competition, industry is the price maker and firm is the price taker.” Discuss. Answer: Yes, this statement is true. As we know, in Perfect competition, homogeneous goods are produced. So, industry cannot charge different price from different firms.
Detailed explanation-4: -The answer is d. There are many suppliers in perfect competition making an identical product. No supplier makes enough of the supply of the product that they can influence the market equilibrium. Each firm is a price taker.