In a perfectly competitive market,no firm will charge a lower price for its product because
A) other firms will also lower their prices to match.
B) the government will take legal action against the lower-price firm.
C) consumers will demand a higher price.
D) there are many sellers in the market selling an identical good at a single price.
E) there is always a bigger firm that can sell at an even lower price.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many sellers offering an identical good at a single price. If one firm lowers their price, consumers would simply choose to purchase from that firm and others would follow suit in order to remain competitive. Therefore, none of the firms would have an incentive to charge a lower price since they would not gain any market share or advantage over their competitors.

In a Perfectly Competitive Market,no Firm Will Charge a Lower