Ken's Lawn Service Co.operates in a perfectly competitive market.Why doesn't Ken try to increase his revenue by lowering his price below the prevailing market price?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, Ken cannot charge a price higher than the market price because consumers have many alternatives. Similarly, he cannot charge a price lower than the market price because he can sell as much as he wishes to at the market price, and a lower price would only reduce his revenue per unit sold. Therefore, the best option for Ken is to sell at the prevailing market price.