Identify price-takers and price-setters firms and Explain how much control do they have over the prices they charge?...

Identify price-takers and price-setters firms and Explain how much control do they have over the prices they charge?

Explain your answer with adding real examples, either from experience or from other business in Oman country, to enrich answer quality and to connect theory with practice.

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Expert Solution

A price-taker firm is a perfectly competitive firm, selling homogenous products. These firms accept the prevailing market price for its products as huge number of buyers and sellers have no influence on price and hence, are known as price takers. Whereas, a price setter firm is opposite of price taker firms. These are monopolist firms. Market with monopoly power have influence over the market price, as they product they sell is differentiated i.e. no close substitute available and number of sellers are few. They can charge any price for any quantity provided. These firms enjoy pricing power.

With respect to Oman, one such perfectly competitive market is Oman's fish market, in the capital city of Muscat. With large number of buyers and sellers in the market, having no influence over the price and hence, are price takers. Omantel, being the leading and primary provider of internet services in Oman, having influence over the market price, enjoys monopoly power and hence, are price setters.

Rahul Sunny answered 1 year ago

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