Do you think sellers in a perfectly competitive market can price their goods differently? Explain your answer
What will be an ideal response?
One of the assumptions of perfect competition is that all sellers sell identical goods. This implies that sellers who increase the price of their products will lose market share and go out of business because consumers will shift to other sellers who are offering the same goods. Besides, a seller in a perfectly competitive market can sell any amount of the good at the given market price. Hence, they actually do not have any incentive to deviate (increase or decrease) from the market price. Thus, all sellers in a perfectly competitive market are price takers.
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Suppose Lisa spends all of her money on books and bagels, and a bagel is an inferior good for her. When the price of coffee increases, the
A) consumption of coffee will fall. B) consumption of coffee will rise. C) consumption of coffee will not change. D) Not enough information.
For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay
a. True b. False Indicate whether the statement is true or false