If a firm is a price taker, then the demand curve for the firm's product is

Multiple Choice

a. perfectly elastic.

b. perfectly inelastic.

c. equal to the total revenue curve.

d. unit plastic.

The correct answer is option a.

Explanation:

A price taker firm does not decides the price of the product. The price is generally decided by the market forces. The firm gets the price and has to decide the output to produce at that price. The demand curve, in this case, is perfectly elastic.

If a firm increases price the consumers will move to other lower-priced firms. Firms in a perfectly competitive market are price takers. Firms in the imperfect competition are price makers.