An individual firm in a perfectly competitive market

Select one:

a. is very concerned with its competitors' marketing decisions.

b. cannot affect market price.

c. may be able to increase its price without losing sales.

d. will decrease the price of its output if it produces too much.

Expert Solution

b. cannot affect market price.

An individual firm in a perfectly competitive market cannot affect market price.

Explanation to the answer -

In a perfectly competitive market, the price is determined by the intersection of market demand and market supply. No buyer or seller has any influence over the price. Here industry is the price maker. Individual firms are price takers and they must accept that market price for their outputs, which has been determined by the intersection of market demand and supply.

As there are so many buyers and sellers in the market, an individual firm can not affect the market or market price.

Rahul Sunny answered 2 years ago

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