In a perfectly competitive market, which of the following is a primary factor influencing pricing decisions?
A) cost of production
B) availability of raw materials in the market
C) information on competitor's cost structure
D) value customers place on product

Question

Quizplus · Accepted Answer

In a perfectly competitive market, where many firms offer the same product, price is primarily influenced by the value customers place on the product. This means that firms cannot set prices above the market equilibrium, as customers have the option to buy the same product from a competitor at a lower price. Cost of production, availability of raw materials, and information on competitor's cost structure may influence pricing decisions in other markets, but not in a perfectly competitive market where firms have little control over price.

In a Perfectly Competitive Market, Which of the Following Is