Question

Why a firm under perfect competition will not lower the price to increase its sales?

Answer 1

A perfectly competitive firm will not lower the price because of the following reasons:
(i) A firm under perfect competition can sell whatever amount it wishes to sell at the existing price.So that there is no reason to lower the price.
(ii) An individual firm under perfect competition is such a small supplier in the market that by lowering the price, it cannot fulfill the entire market demand for the commodity. Accordingly,the policy of capturing market by lowering the price will fail.