answer should base on micro economics
2007-02-09 00:18:51 · 2 answers · asked by Christine D 1 in Social Science ➔ Economics
A firm is a price taker, meaning that the firm must accept whatever price the consumers are offering in the market as a whole. This is because the firms product is the same as every other firm producing for that market. There is no differentiation, which is the sign of a price maker. Thus, the firms product is a commodity, and they will be forced to accept the going price, or the consumer will obtain their product from one of the numerous other producers.
2007-02-09 02:53:14 · answer #1 · answered by theeconomicsguy 5 · 0⤊ 0⤋
Price taker firms face a horizontal demand curve, the quantity they choose to supply has no bearing on the price they can charge as they have no market power. This is the result of firms being atomistic and not being able to significantly alter the industry supply. Price makers face a downwards sloping demand curve. They can alter the price of the good by choosing to supply different quantities.
2007-02-11 23:26:12 · answer #2 · answered by Tim W 4 · 0⤊ 0⤋