Question

A seller in a competitive market can sell all he or she wants at the current market price.

Select one:

a. True

b. False

Answer 1

True, a seller in a competitive market can sell all he or she wants at the current market price because if the seller tries to charge the price which is different from the current market price then there are two possibilities, first possibility includes in which he or she tries to charge more than the market price in which nobody will buy from that seller because there are other sellers selling the good at the lower price, and the second possibility includes in which the seller charges the price which is less than the market price and, in that case, the seller will incur the loss because in a competitive market price is equal to the marginal cost so any price below the marginal cost will lead to loss; therefore it is not it in the best interest of the sellsr to charge the price lower than the current market price.