When are firms likely to be price takers?
1 Answer
Jan 29, 2016
In a perfectly competitive market, the firms are price takers.
Explanation:
Under perfect competition,
There are large number of buyers and sellers.
Product is homogeneous.
Buyers and sellers posses perfect knowledge.
Each firm is contributing only an insignificant proportion of the output of the industry. Hence price is determined in the industry by demand and supply forces. A firm has to simply accept the price and adjust its output.
