A purely competitive firm does not try to sell more of its product by lowering its price below the market price because
A) its competitors would not permit it.
B) it can sell all it wants to at the market price.
C) this would be considered unethical price chiseling.
D) its demand curve is inelastic, so total revenue will decline.

Question

Quizplus · Accepted Answer

A purely competitive firm is a price taker, meaning that it has no control over the market price. Therefore, it can sell all it wants to at the market price and does not need to lower its price to sell more. Additionally, if the firm were to lower its price below the market price, it would not be able to sell any more of its product because consumers would simply buy from the other firms offering the same product at the market price.

A Purely Competitive Firm Does Not Try to Sell More