If a competitive firm charges more than the market price, then it makes a profit and gains more customers.

Name: If a competitive firm charges more than the market price, then it makes a profit and gains more customers.
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Question

Quizplus · Accepted Answer

Competitive firms in a market are price takers, meaning they cannot charge more than the market price without losing customers to rival firms that charge less. By charging more, the firm would become less competitive and therefore lose customers, resulting in a decrease in profit.

If a Competitive Firm Charges More Than the Market Price