Jason, a high-school student, mows lawns for families in his neighbourhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many sellers offering the same product or service at a standardized price. Any seller who tries to charge a higher price than the others will likely lose all their customers. Therefore, if Jason raises his price to $20, he would no longer be competitive, and his customers would seek out other lawn-mowing services that charge the going rate of $12.

Jason, a High-School Student, Mows Lawns for Families in His