A competitive firm would benefit from charging a price below the market price because the firm would achieve
(i)higher average revenue.
(ii)higher profits.
(iii)lower total costs.
A)(i) only
B)(ii) and (iii) only
C)(i), (ii), and (iii)
D)None of the above is correct.

Question

Quizplus · Accepted Answer

A competitive firm is a price taker and cannot charge below the market price to gain higher revenue or profits. Charging below the market price would not lower total costs and would reduce revenue and profits.

A Competitive Firm Would Benefit from Charging a Price Below