If a firm is in a perfectly competitive world but decides to charge a higher price than its competitors,
A) the firm's profits will be zero or negative, and the firm will fail in the long run.
B) the firm's profits will be zero or negative, and the firm will fail in the short run.
C) the firm's profits will be positive or negative, and the firm will fail in the short run.
D) the firm's profits will be positive or negative, and the firm will fail in the long run.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms are price takers and must accept the market price. If a firm charges a higher price than its competitors, it will lose all of its customers to the lower-priced competitors. As a result, the firm's profits will be zero or negative, and the firm will fail in the long run.

If a Firm Is in a Perfectly Competitive World but Decides