Asked by Marina Carosella on Jul 15, 2024
Verified
A purely competitive seller is:
A) both a "price maker" and a "price taker."
B) neither a "price maker" nor a "price taker."
C) a "price taker."
D) a "price maker."
Price Taker
A seller (or buyer) that is unable to affect the price at which a product or resource sells by changing the amount it sells (or buys).
Price Maker
A market participant that has the power to influence the price of a product or service by controlling its supply, its demand, or both.
- Investigate the consequences for a firm's pricing strategies and production outputs when it acts as a price taker in a wholly competitive marketplace.
Verified Answer
JP
Jenny PadillaJul 18, 2024
Final Answer :
C
Explanation :
A purely competitive seller is a small part of a large market and has no power to influence the price, so they must accept the market price and act as a "price taker." They do not have the ability to set the price themselves and thus cannot be considered a "price maker."
Learning Objectives
- Investigate the consequences for a firm's pricing strategies and production outputs when it acts as a price taker in a wholly competitive marketplace.