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Why a firm is a price taker and not a price maker under perfect market conditions?
Wiki User
∙ 9y ago
the firm is too small and has too much cometition which offers the same product. if it charged more than ist cost Price the competition would take the customer away. becoming a pricemaker needs a local, innovational, governmental or resource based monopoly. that's not given under perfect marked condition.
Wiki User
∙ 9y ago
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What is market driven?
Market driven means the market determines the price. In perfect competitions, the market determines the price of products, not the business.
In a perfectly competitive market while an industry is a price maker an individual firm is a price taker elaborate?
An industry is a price maker because many companies compete and the market dictates the price. Companies are price takers because they can't set the prices. Organizations have to focus on keeping cost low.
What is the difference between an imperfect and perfect market?
Perfect markets refer to markets where there is competition and sellers are price takers. An imperfect market refers to markets that have a dominant seller and they are able to set the price.
What is market value?
The highest estimated price that a property will bring in a competitive and open market and under all conditions required for a fair sale.
Why would a market that consisted entirely of perfectly competitive firms not be 'perfect'?
The concept of perfect competition is based on a large number of small firms, where no single firm can affect the market price. These firms operate as price takers, and use the cost supplied by the market. These ideal companies would insure efficiency. However, perfect competitive firms are unrealistic in real world scenarios.
What sets prices in a perfect market?
market conditions are responsible for price setting, as thing in perfect market are homogeneous, any different product with special feature would have a high price for it .
Does a perfect competitive market have an influence over price?
In perfect copmetative marker there is no influence of price...
What is market driven?
Market driven means the market determines the price. In perfect competitions, the market determines the price of products, not the business.
How can price be determined in a free market economy?
In a perfect free-market economy, price is determined by supply and demand.
A firm under a perfact competition is a price-taker not price-maker with examples?
it is a price taker because under perfect competition,price is determined by the market(through price mechanism:demand and supply) and not producer.this is because there are so many producers of the same product and all have the perfect knowledge of the market and there is only one buyer of that product,so no body can decide the price of the commodity on behalf of others.thats why a firm under perfect competition is a price taker and not a price maker. As part of the industry, the firm has to simply charge price determined by the industry. If the firm charges more price, it will lose sales and if it charges less price it will incur losses. The typical example of perfect competition is agriculture. The products are indistinguishable. There are many potential suppliers. This makes the farmer a price taker; if he or she prices the product higher than the market price, he or she will not make any sales or make fewer sales, thus incurring loss. Thus the farmer has to go with the price determined by the industry in order to survive
Distinguish perfect competition and imperfect competition?
In imperfect competition the producer is the price maker. Whereas in perfect the producer is the price taker meaning there are many producers and no one can influence the price.
In a perfectly competitive market while an industry is a price maker an individual firm is a price taker elaborate?
An industry is a price maker because many companies compete and the market dictates the price. Companies are price takers because they can't set the prices. Organizations have to focus on keeping cost low.
How does price ceiling affect total surplus in perfect competitive market?
Sperm in the market flow
What is the difference between an imperfect and perfect market?
Perfect markets refer to markets where there is competition and sellers are price takers. An imperfect market refers to markets that have a dominant seller and they are able to set the price.
In what kind of market is the price demand the most elastic?
Perfect Competition
Is there a place to screen for stock options that are bought at the ask price?
All stock options are bought at the ask price. There is no such thing as buying at bid price unless you are a market maker bidding for options in the open market.
What is monopolist's marginal revenues less than the price of its goods?
because the monopolist firms are price maker and they can set any price they want and the customers are not perfect knowleged
