If a perfectly competitive firm raises its price above the market price,it will lose all its customers.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, all firms are price takers, meaning they must accept the market price. If a firm were to raise its price above the market price, its customers would simply go to other firms offering the same product at the market price. Therefore, the firm would lose all its customers.

If a Perfectly Competitive Firm Raises Its Price Above the Market