What is one reason perfectly competitive firms wish to be ever more efficient?
A) Individual firms are awarded by the tax code to be more efficient.
B) Individual firms can better control their costs than the price they can charge.
C) Individual firms can better control their costs than their output levels.
D) Individual firms don't need to be efficient; government policies do not reward efficiency.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, all firms sell an identical product, so they cannot raise prices without losing customers to competitors. Therefore, the only way for firms to increase profits is to reduce costs. By becoming more efficient, firms can control their costs more effectively and potentially earn higher profits.

What Is One Reason Perfectly Competitive Firms Wish to Be