Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $12.Which of the following will happen?
A)The firm will sell more output than its competitors.
B)The firm's revenue will increase.
C)The firm will not sell any output.
D)The firm's profits will increase.

Question

Quizplus · Accepted Answer

A firm selling its output at $12 will not be able to find any buyers since the equilibrium price, which is the price at which quantity supplied equals quantity demanded, is $10 in the perfectly competitive industry. Therefore, the firm will not be able to sell any output.

Suppose the Equilibrium Price in a Perfectly Competitive Industry Is