In a Competitive Market, When Price Is Below the Equilibrium

question 75

Multiple Choice

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to:

• A) fall.
• B) stay the same.
• C) rise.
• D) change only if demand and/or supply change.

Analyze how the elasticity of demand influences profit-maximizing pricing strategies.

Understand the implications of constant marginal cost on pricing and production decisions.

Assess how market concentration ratios indicate the level of competition within an industry.

Investigate factors that influence a firm’s elasticity of demand.

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