Why Can't a Firm in a Perfectly Competitive Industry Charge

question 14

Multiple Choice

Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price?

• A) Government-imposed price ceilings prevent prices from being raised.
• B) Firms in a perfectly competitive industry face significant barriers to entry.
• C) Perfectly competitive firms are price searchers.
• D) Numerous competitors produce the same product and charge the market price.

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Definitions:

Unrealized Capital

Refers to an increase or decrease in the value of an investment that has not been sold and thus the gain or loss has not been realized.

Organization Expense

Costs associated with the formation of a corporation or organization, such as legal fees and registration charges.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits via dividends.

Organization Expenses

Costs incurred in the formation of a corporation, partnership, or other business entity, typically including legal and registration fees.