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Basic Question 1 of 4
The term "price searcher" applies to all firms that ______
B. face a downward-sloping demand curve.
C. purchase resources in a non-competitive market.
A. operate in a purely competitive environment.
B. face a downward-sloping demand curve.
C. purchase resources in a non-competitive market.
User Contributed Comments 6
| User | Comment |
|---|---|
| JimM | A monopoly's demand curve is also downward sloping. |
| lpan | Price takers are firms in perfect competition and their demand curve perfectly elastic(horizontal) |
| dmfcrowe | Monopoly is also a price searcher, but differentiated by high entry barriers etc. |
| erinelize | I thought a Monopoly was a price-setter. That's what the notes said... |
| YOUCANDOIT | ^^^ b/c monopolies have incomplete information regarding market demand elasticity, it has to "experiment" with different output levels until it finds the profit-maximizing output and then it sets the price which corresponds to this quantity. So while a monopoly is a price-setter, it is also a price-searcher. |
| Creep | Key difference to be noted between price-searcher and price-taker. |
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Learning Outcome Statements
explain supply and demand relationships under monopolistic competition, including the optimal price and output for firms as well as pricing strategy
CFA® 2024 Level I Curriculum, Volume 1, Module 1.