Answered: In perfect competition, why do firms…

In perfect competition, why do firms act as price takers? What happens if they charge a different price than market price? Draw graph if necessary

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 32CTQ: Your company operates in a perfectly competitive market. You have been told that advertising can...

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Concept explainers

Equilibrium Price and Quantity

Equilibrium refers to a state of balance that comes about because there is equality in all forces.

Question

In perfect competition, why do firms act as price takers? What happens if they charge a different price than market price? Draw graph if necessary

Definition Definition Structure of the market that exists when many buyers and sellers exchange similar commodities and prices are fixed by market forces, demand, and supply. When there is perfect competition, a single business cannot impact the price or market value of the homogenous product.

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