A firm that faces a downward-sloping demand curve is a price maker. This means that the firm has the ability to influence the price of its product in the market by adjusting the quantity it supplies. Here's why:
1. Price Maker: When a firm faces a downward-sloping demand curve, it means that as the firm increases the price of its product, the quantity demanded decreases. This gives the firm the power to set the price at a level where it can maximize its profits based on its production costs and the demand for its product.
2. Revenue Maximization: While a firm that faces a downward-sloping demand curve can indeed aim to maximize its revenue by setting the price at an optimal level, the primary characteristic that distinguishes such a firm is its ability to act as a price maker in the market.
Therefore, the correct answer to the question is: a firm that faces a downward-sloping demand curve is a price maker.
