Epsilon currently pays $78 per unit to buy a part for a product it sells. Epsilon has excess capacity, and estimates that making the part would incur variable costs of $8 for direct materials and $42 for direct labor. Epsilon's normal predetermined overhead rate is 150% of direct labor cost, but management computes an incremental overhead rate of $16.80 per unit to make this part. Epsilon should choose to:

Which of the following statements best reflects a price-taking firm? price-taking firms maximize profits by charging a price above marginal cost. the firm can sell only a limited amount of output at the market price before the market price will fall. if the firm were to charge more than the going price, it would sell none of its goods. the firm has an incentive to charge less than the market price to earn higher revenue.