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(a)
Whether a business of cappuccino café is a
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Answer to Problem 1P
The café is a price taking producer
Explanation of Solution
- In the given case, the café operates in a university town where there are various similar kinds of cafés.
- Here, since the café is not the only one in the market, it cannot fix a price of their own choice. Hence, it is a price-taking producer..
Introduction:
Price-Taking Producer: This refers to the producer who is one of the many producers in a competitive market and cannot set the prices of its own choice. A price-taking producer needs to sell goods at those prices that prevail in the market.
(b)
Whether a maker of pepsi-cola are price-takers?
(b)
![Check Mark](/static/check-mark.png)
Answer to Problem 1P
Pepsi Company is not a price-taking producer.
Explanation of Solution
- In the given case, Pepsi Company is not in a
perfectly competitive market and is one of the few cola producers.
- Moreover, its product differs from other cola products and hence, it is possible for the Pepsi Company to offer its product at a price of its own choice.
Introduction:
Price-Taking Producer: This refers to the producer who is one of the many producers in a competitive market and cannot set the prices of its own choice. A price-taking producer needs to sell goods at those prices that prevail in the market.
(c)
Whether a seller of Zucchini is a price-taker?
(c)
![Check Mark](/static/check-mark.png)
Answer to Problem 1P
The sellers of zucchini are price-taking producers.
Explanation of Solution
- In the given case, there are numerous sellers of the product zucchini in the market and each seller has a small share in the market.
- It is not possible for a single seller to affect the price of the product and hence, the sellers of zucchini are price-taking producers.
Introduction:
Price-Taking Producer: This refers to the producer who is one of the many producers in a competitive market and cannot set the prices of its own choice. A price-taking producer
needs to sell goods at those prices that prevail in the market.
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