Question

When an individual firm in a competitive market increases its production, it is likely that the market price will fall. True or False? Explain

Answer 1

The answer is False

The market price remains the same

A competitive market, also referred to as a truly competitive market, has two characteristics:

There are a lot of buyers and a lot of sellers on the market
The goods offered by the different sellers are essentially the same
As a consequence of these factors, the actions of any single consumer or seller on the market have a marginal effect on the stock price.buyer and seller shall take the market price as offered, meaning that they must accept the price decided by the market and, thus, that buyers and sellers are said to be price takers.