Table of contents

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0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

11. Perfect Competition

Perfect Competition and Efficiency

Microeconomics

11. Perfect Competition

Perfect Competition and Efficiency

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Multiple Choice

The firm is a price taker because:

It has a U-shaped ATC curve

The profit-maximizing point occurs where MC equals ATC

The MC curve has an upward slope

The MR curve is horizonta

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Verified step by step guidance

Understand that a price taker is a firm that cannot influence the market price and must accept the price determined by the overall supply and demand in the market.

Observe the graph labeled 'Single Firm'. Notice that the Marginal Revenue (MR) curve is horizontal, indicating that the firm can sell any quantity of output at the market price.

Recognize that the horizontal MR curve is a characteristic of a perfectly competitive market, where firms are price takers.

In a perfectly competitive market, the firm's demand curve is perfectly elastic, which is why the MR curve is horizontal.

The graph labeled 'Market' shows the overall supply and demand, determining the market price. The firm in the 'Single Firm' graph takes this price as given, reinforcing its role as a price taker.