Individual firms in a perfectly competitive market can _____

Question

Quizplus · Accepted Answer

In a perfectly competitive market, all firms sell an identical product and there are no barriers to entry or exit. As a result, the market sets the price and individual firms have no control over it. Therefore, firms can sell all they produce at the market price but cannot sell more by lowering their prices. Charging a price above the market price would result in no sales, and charging a price below the market price would result in lower profits or even losses. Finally, firms can exit the market whenever they want without the permission of existing firms.

Individual Firms in a Perfectly Competitive Market Can _____