Competitive firms are able to set price above marginal cost when
A) the markup is less than the cost of going to another store.
B) the markup is greater than the cost of going to another store.
C) all consumers have full information.
D) consumers know what other stores are charging.

Question

Quizplus · Accepted Answer

Competitive firms can set prices above marginal cost if the markup is less than the cost of going to another store, as consumers may not find it worthwhile to incur additional costs to purchase from a different store.

Competitive Firms Are Able to Set Price Above Marginal Cost