A firm that is a price taker will not sell any of its product for less than the equilibrium price because

Question

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A firm that is a price taker has no market power and must accept the equilibrium price determined by the market. If it were to try to sell its product for more than the equilibrium price, it would not find any buyers. If it were to sell its product for less than the equilibrium price, it would quickly sell out of its product and would not be able to meet the demand at that price, so it would miss out on potential profits. Therefore, the only option for a price taker is to sell its product at the equilibrium price, and it can sell all it can produce at that price. Choice A is incorrect because there is no law against selling a product for less than the equilibrium price, as it is a market-determined price. Choice C is incorrect because inviting competition is not always a bad thing and does not necessarily mean the profits of the firm will go down. Choice D is incorrect because price-taker firms do not typically enter into cartel agreements, as they have no market power to coordinate and control prices.

A Firm That Is a Price Taker Will Not Sell