Firms ill a perfectly competitive market are said to be “ price takers” that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?

Question

Want to see more full solutions like this?

Answer 1

Textbook Question

Chapter 8, Problem 1SCQ

Firms ill a perfectly competitive market are said to be “price takers” that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Don't used Ai solution

"Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the same." Assume that there are n identical profit-maximising firms where profit for each firm is given by π(e) with л'(e) > 0; π"(e) < 0 and e denotes emissions. Individual emissions summed over all firms gives E which generates environmental damages D(E). Show that the regulator achieves the optimal level of total pollution through a tradeable emission permit scheme, where the permits are distributed according to the following cases: Case (i) the firm purchases all permits; Case (ii) the firm receives all permits free; and Page 3 of 5 ES30031 Case (iii) the firm purchases a portion of its permits and receives the remainder free of charge.

compare and/or contrast the two plays we've been reading, Antigone and A Doll's House.

Answer 2

Textbook Question

Chapter 8, Problem 1SCQ

Firms ill a perfectly competitive market are said to be “price takers” that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 8, Problem 1SCQ

Firms ill a perfectly competitive market are said to be “price takers” that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 8, Problem 1SCQ

Firms ill a perfectly competitive market are said to be “price takers” that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Answer 8

Expert Solution & Answer

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Why all the firms are considered as price takers in a perfectly competitive market.

Answer 12

Explanation of Solution

Market equilibrium in a perfectly competitive market is attained with the forces of demand and supply. When the price is too high, the demand falls and when the demand falls, only a price fall will lead to increase in demand for the market to fix itself. All the firms are considered to be “price takers” because, all the buyers and sellers have all the information there is and as there are a large number of buyers and sellers dealing with homogeneous products, there will not be a single firm that can influence the price. If a firm increases the price, the buyers know that there are other sellers selling at a lower price and the firm that increased the price will have no buyers at all.

If you are a seller in a perfectly competitive market, and you are unhappy with the price, you would not raise the price, not even by a cent because you will know that if you increase the price even by a cent, all the buyers will shift to the other sellers as they know that they will be getting the exact same product at a lower cost.

Answer 13

Economics Concept Introduction

Concept introduction:

Perfect Competition- It refers to that market condition where there are a large number of buyers and sellers, who have perfect knowledge about the market, and there is existence of homogeneity in the commodities and all the firms are price takers.

Answer 14

Ch. 8 - Firms ill a perfectly competitive market are said...Ch. 8 - Would independent trucking fit the characteristics...Ch. 8 - Look at Table 8.13. What would happen to the films...Ch. 8 - Suppose that the market price increases to 6, as...Ch. 8 - Explain in words why a profit-maximizing film will...Ch. 8 - A firms marginal cost curve above the average...Ch. 8 - If new technology in a perfectly competitive...Ch. 8 - A market in perfect competition is in long-run...Ch. 8 - Productive efficiency and allocative efficiency...Ch. 8 - Explain how the profit-maximizing rule of setting...

Explanation of Solution

Want to see more full solutions like this?

Chapter 8 Solutions

Additional Business Textbook Solutions