Q. 104.0( 1 Vote )

(a) ‘‘A firm unde

Answer :

a)

● This statement is correct.


● A firm will only accept the price of the good which is determined by the forces of demand and supply in the market.


● The firms adopt the dependent price policy because they are producing a very small fraction of the total supply of the good in the market.


● They have no control over the prices.


● Any firm cannot adopt its own independent price policy but can only adjust according to the prices of the market.


● No firm is ready to sell the product below this price and no buyer is ready to purchase the product higher than this price.


● So it is rightly said that the firm under perfect competition is a price taker.


● In case of a Monopoly market, there is only a single producer of the good. He has 100% control over its supply.


● The firm adopts independent price policy. It can increase or decrease the price of it goods.


● So it is rightly said that the firm under monopoly is a price maker.


b) Selling costs are the expenses on advertisement, salesmanship, free sampling, free service, door-to-door canvassing, and so on. There is no selling problem under perfect competition where the product is homogeneous.


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