what it means by price taker firm

Expert Solution

Price taker firm are firm operating under perfect competition and they accept the price prevailing in the market. The profit maximizing level of price taker firm is achieved when price is equal to marginal cost.

A price-taker is an individual or company that must accept prevailing prices in a market, lacking the market share to influence market price on its own. Due to market competition, most producers are also price-takers. Only under conditions of monopoly or monopsony do we find price-making.Market makers set prices in financial products like stocks. But market markers are also in competition with one another to trade.

in a competitive industry, there are no barriers to entry and each company holds a relatively small market share. Therefore, the producers of goods are forced to “take” the prevailing market price to maintain their market share and remain competitive. Likewise, price takers individuals are investors who are forced to “take” the market price of a share because their individual trades are not enough to influence the market price.

Rahul Sunny answered 2 years ago

A firm in a competitive market is a price taker (recall that this is true for...

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1. A perfectly competitive firm is a price taker because Its products are differentiated. The price...

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A) If a firm is a price taker its marginal revenue is: Constant Decreasing as quantity...

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The supply curve of a price-taker firm in the short run is the: Group of answer...

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1. A single firm in a perfectly competitive market is a price taker? True or False....

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A perfectly competitive firm is a price taker because: It has a relatively large degree of...

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Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm...

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15. Which of the following is a true statement about the difference between a price-taker firm...

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A price-taker firm has an average total cost function given by ATC = 972 / q...

A price-taker firm has an average total cost function given by ATC = 972 / q + 5 + 3q . Calculate the price at which the firm would zero profits.

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