Answer to Question #73089 in Macroeconomics for jack

Question

This problem asks you to consider a company refining crude oil into gasoline. The company hires
workers to process an input (crude oil) into an output (gasoline). You should assume both the (output)
market for gasoline and the labor market for workers are perfectly competitive, and that the firm must
pay the equilibrium wage set in the labor market and charge the equilibrium price for gas set in the
market for gas.

Answer 1

If you should assume both the (output) market for gasoline and the labor market for workers are perfectly competitive, and that the firm must pay the equilibrium wage set in the labor market and charge the equilibrium price for gas set in the market for gas, then the firm is a price taker.