A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell the

Question

A pretzel-stand owner in Chicago hires workers to make hot pretzels and sell them to customers. If the firm is competitive in both the market for pretzels and in the market for pretzel-makers, then it has

A. some control over both the price of pretzels and the wage it pays to its workers.

B. no control over either the price of pretzels or the wage it pays to its workers.

C. no control over the price of pretzels but some control over the wage it pays to its workers.

D. some control over the price of pretzels but no control over the wage it pays to its workers.

Explanation / Answer

A competitive firm is price taker because pretzel firm is competitive in both the market for pretzels and in the market for pretzel-makers, we can say it has . no control over either the price of pretzels or the wage it pays to its workers.

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