In a perfectly competitive market, a firm that raises its price when its competitors do not
A) must have a differentiated product
B) must have relatively high costs and therefore must raise price to compensate
C) sells no goods
D) gains market share
E) will become a monopolist eventually

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning they cannot set their own prices above the market equilibrium without losing all their customers. If a firm raises its price while others do not, consumers will simply buy from the competitors, resulting in the firm selling no goods.

In a Perfectly Competitive Market, a Firm That Raises Its