If a perfectly competitive firm raised the price of its product,
A) its profits would increase.
B) the quantity of output it sells decreases to zero.
C) rival firms will follow suit and raise their prices also.
D) the firm will be forced to advertise more.
E) its total revenue would rise but its total cost would rise by more.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers, meaning they must accept the market price. If a firm raises its price above the market price, consumers will buy from other firms offering the product at the market price, leading the firm's sales to drop to zero.

If a Perfectly Competitive Firm Raised the Price of Its