Question

Are firms price makers or price takers in a perfect competition?

Answer 1

Under Perfect Competition, a firm is a price taker.

Explanation:

Under Perfect Competition -

There are large number of firms, producing homogeneous product. There are large number of firms. Both buyers and sellers posses perfect market knowledge. No single seller or buyer can influence the price. It is determined in the industry by the market forces - demand and supply. A firm has to accept the price and adjust its out put to earn profit.

Price taker