Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $9.Which of the following will happen?

Question

Quizplus · Accepted Answer

If the equilibrium price is $10 and the firm charges $9, it will not be able to sell all of its output because consumers will choose to purchase from other firms at the lower $10 price. Therefore, the firm will have to lower its price to sell its output, resulting in lower profit compared to the $10 price. This means that the firm will make less profit than it could at the $10 price.

Suppose the Equilibrium Price in a Perfectly Competitive Industry Is