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Microeconomics

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Supply and Demand: Equilibrium Mechanisium

MICRO-GKNJSE

Imagine a competitive market in equilibrium. If the sellers could make more money per unit sold, why are the sellers not interested in charging higher prices?

A

Because none of the consumers would ever be willing to pay a price any higher than the current equilibrium price.

B

Because firms are not allowed to raise their prices.

C

Because one of their competitors will always be able to undercut them and take away their customers.

D

There is no reason they will not do it. Suppliers will start charging higher prices.