Question

State with reason whether you agree or disagree with the following statement:

The seller is a price taker in perfect competition.

Options

• Agree

• Disagree

Answer 1

I agree with the above statement.

Reasons:

1. There are many possible sellers of their homogeneous good in the market in perfect competition.
2. When there is perfect competition, there are so many vendors that it is impossible for one seller to affect the market price.
3. The interplay of market supply and demand for a commodity determines the product's price in a perfect competition.

Therefore, under perfect competition, the seller is a price taker.