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 were perfectly competitive, what would happen if Jason raised his price?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, customers have access to many suppliers who offer the same product or service. Customers will easily switch to other suppliers if the price increases. Therefore, if Jason raises his price, customers will turn to other teenagers who offer the same lawn-mowing service for $12. This competition will force Jason to lower his price back to $12 or risk losing all his customers.

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