Firms in competitive industries:
I. can only charge a price equal to the market price.
II. cannot charge any more than the market price.
III. will earn less profit if they charge less than the market price.
A) I only
B) I and III only
C) II only
D) I, II, and III

Question

Quizplus · Accepted Answer

In competitive industries, firms are price takers, meaning they must charge the market price (I and II). Charging less than the market price would reduce profits (III).

Firms in Competitive Industries