Refer to the accompanying figure to answer the following questions. For a firm in a competitive market,the demand curve is horizontal,as shown. -What will happen if the firm offers its product at a price slightly above price P_C? A) The marginal revenue will drop below zero. B) The firm will slightly increase its profits. C) The sales volume will plummet to essentially zero. D) The firm will run into high barriers to exit from the market. E) The number of units sold will slightly increase.

Question

Quizplus · Accepted Answer

As the firm offers its product at a price slightly above P_C, it will not be able to sell any units at all, as the demand curve is horizontal. Therefore, the sales volume will plummet to essentially zero.

Refer to the Accompanying Figure to Answer the Following Questions