A purely competitive firm does not try to sell more of its product by lowering its price below the market price because
A)its competitors would not permit it.
B)it can sell all it wants to at the market price.
C)this would be considered unethical price chiseling.
D)its demand curve is inelastic, so total revenue will decline.

Question

Quizplus · Accepted Answer

In a purely competitive market, firms are price takers, meaning they accept the market price as given. Each firm can sell all it wants at the prevailing market price because its individual supply does not affect the market price. Lowering the price would not benefit the firm since it can already sell its entire output at the market price.

A Purely Competitive Firm Does Not Try to Sell More