Multiple choice

Which of the following is not a characteristic of a Price taker?

  1. TR = PXQ

  2. AR = Price

  3. Negatively - sloped demand curve

  4. Marginal Revenue = Price
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Price takers (firms in perfect competition) face horizontal demand curves at the market price - they can sell any quantity at that price but cannot influence it. TR = P×Q and MR = P are correct price taker characteristics. AR = P is also true since average revenue equals price for all firms. A negatively sloped demand curve would give the firm price-setting power, contradicting price-taking behavior.

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