Suppose the equilibrium price in a perfectly competitive industry is $100,and a firm in the industry charges $112.Which of the following is likely to happen?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, all firms sell their output at the equilibrium price. If a firm charges a higher price, it will not be able to sell any of its output as consumers will buy from other firms offering the same product at a lower price. Therefore, the firm cannot sell more output than its competitors, and its profits and revenue will not increase. It is also not possible for the firm to take over the entire industry as there are other firms operating in the market.

Suppose the Equilibrium Price in a Perfectly Competitive Industry Is