Why is a firm under perfect competition a 'price-taker' and not a 'price-maker'? Explain.
Why is a firm under perfect competition a 'price-taker' and not a 'price-maker'? Explain.
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There are large number of sellers in a perfectly competitive market, so that an individual firm has a negligible share in total supply. As such no individual seller can influence the market price on its own. The seller has no option but to accept the market determined price. It makes the seller a 'Price Taker'.
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