One important result from the heterodox position that busine

One important result from the heterodox position that businesses set their prices before production and sales occur is that…

Question 9 options:

A)

There is no such thing as a firm supply curve

B)

When quantity sold in the market decreases, the business will typically decrease prices

C)

When quantity sold in the market decreases, the business will typically increase prices

D)

Price and quantity supplied in the market are determined independently

E)

A and D

F)

All of the above

Solution

Option E. A and D

Explanation: The price a firm charge depends on the supply curve, which is determined by the cost of production. Therefore, the heterodox position that businesses set their prices before production and sales occur assumes that there is no supply curve.

The price depends on quantity supplied. Higher supply results in a lower price and vice versa. Therefore, price and quantity supplied are not determined independently. The heterodox position that businesses set their prices before production and sales occur assumes that price and quantity supplied are determined independently.