+3 votes
in Class 12 by kratos

Why is a firm under perfect competition a 'price-taker' and not a 'price-maker'? Explain.

1 Answer

+3 votes
by kratos
 
Best answer

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'.

...