Asked by Marilyn

Why are the firms in the perfectly competitve markets unable to control the prices of the goods that they produce?

Answers

Answered by economyst
Because under a perfectly competitive market, there are lots of other producers trying to sell the same thing. Take for example a wheat farmer, and say the market price is $10 per bushel. What if the farmer charged $10.10, how much would he sell? Answer is zero, nobody would pay 10.10 when they could buy all they want at $10.00. Well, what if he charged $9.90. He would sell out of course and then feel like a schlemiel, because he could have just as easily sold all of his wheat for $10.

Under the market price in a perfectly competitivie market, a person can immediately buy or sell at that price.
Answered by Marilyn
Explained well, thanks.
There are no AI answers yet. The ability to request AI answers is coming soon!

Related Questions