If an individual perfectly competitive firm charges a price below the industry equilibrium price, it will
A) not sell anything.
B) sell part of what it produces.
C) sell all that it produces and gain more revenue than competing firms will.
D) sell all that it produces but gain less revenue than competing firms will.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning they cannot influence the market price and must accept the equilibrium price determined by market supply and demand. If a firm charges below the equilibrium price, it will still sell all of its production because consumers will prefer to buy the cheaper product. However, because it is selling at a lower price than the equilibrium, it will earn less revenue compared to other firms selling at the market price.

If an Individual Perfectly Competitive Firm Charges a Price Below