Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21.Which of the following will happen?
A)The firm's profits will increase.
B)The firm's revenue will increase.
C)The firm will not sell any output.
D)The firm will sell more output than its competitors.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, all firms charge the same price as the equilibrium price. If a firm charges a higher price, consumers will simply go to competitors who are charging the equilibrium price. Thus, the firm will not sell any output. Also, the firm's revenue and profits will not increase as there are no sales.

Suppose the Equilibrium Price in a Perfectly Competitive Industry Is