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Today, 04:35

Suppose you are a perfectly competitive cotton candy make are you are charging $5 per bag and you are selling 1,000 bags a month. If you lower the price by a nickel, what do you predict will happen to sales? They will go to zero They will not increase because it can sell as many units as it wants at$5 Will decline but not to zero Will increase since demand curves slope down

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  1. Today, 05:21
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    They will not increase because it can sell as many units as it wants at$5

    Explanation:

    a competitive market will take prices it will not change them.

    If it do, when increasing price their sales will drop to zero as the demand is perfectly elastic

    If the firm decides to lower the price it will not have imapct on the sales level.

    It sale as many as possible at 4.99 and then the consumers will keep buying at 5

    Thefirm will only decrease his profit by doing so.
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