6 - A competitive firm: ( )A) is a firm that becomes...

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A competitive firm: ( ) A) is a firm that becomes dominant in an industry through successful competition. (X) B) produces such a small share of industry output that it has insignificant influence on industry price. ( ) C) can influence industry output in a significant way but cannot influence industry price. ( ) D) can influence industry price in a significant way but cannot influence industry output. Feedback: A competitive firm is very small relative to the market as a whole and cannot influence the price of the good. Competitive firms: (X) A) produce different products but charge similar prices. ( ) B) produce identical products and charge identical prices. ( ) C) produce different products and charge different prices depending on market conditions. ( ) D) compete based on service rather than price. Feedback: In competition the product is identical and all firms charge the same price. The fact that competitive firms are price takers means: ( ) A) that each firm charges a different price to each customer. ( ) B) that each firm is careful not to take price for granted and to search for the best price. ( ) C) that a firm charges the same price to all its customers, but charges a different price than those of its rivals. (X) D) that no individual firm has any control over the market price.
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Feedback: A price taker must "take" or accept the market price of the good. In a competitive industry: (X) A) the market demand curve is downward sloping but the demand curve facing the firm is horizontal. ( ) B) marginal cost = price. ( ) C) Both (a) and (b) are true. ( ) D) Neither (a) nor (b) are true. Feedback: In competition the market demand curve is downward sloping, but the individual firm's demand is horizontal; in addition, marginal cost will equal price. A firm operating in a perfectly competitive industry:
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6 - A competitive firm: ( )A) is a firm that becomes...

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