The market for prunes is perfectly competitive with the equilibrium market price of $3 per pound.Farmer Joe wants a new tractor so he wants to sell his prunes at $3.50 a pound.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

In a perfectly competitive market, individual producers cannot influence the market price by setting a price above or below the equilibrium price. If Farmer Joe tries to sell his prunes at $3.50 per pound, consumers will simply buy from other sellers who are offering the same product at a lower price of $3. Joe would not be able to sell any of his prunes at $3.50 per pound. Therefore, option B is the correct answer.

The Market for Prunes Is Perfectly Competitive with the Equilibrium