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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. |
I used your notes and passed ... highly recommended!
Lauren
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® 2025 Level I Curriculum, Volume 1, Module 1.