Question 45
Market StructuresA firm in a perfect market cannot fix its price above the ruling price because
- A.there will be no demand for the product
- B.price control officials will not allow it
- C.other firms will also increase their prices
- D.the demand curve is perfectly inelastic
Show the answer and explanation
Answer: A (there will be no demand for the product)
Explanation
Buyers would switch to identical products sold at the market price.