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Question
The firm under perfect competition is a ______.
Options
Price maker
Price taker
Price stabilizer
Price controller
Solution
The firm under perfect competition is a price taker.
Explanation:
The ideal competition there are so many buyers and sellers that a firm produces such a small portion of overall output that a change in output has no discernible influence on market supply and thus on commodity prices. A competitive corporation lacks market strength and hence cannot influence price. In perfect competition, a firm is thus a price taker.
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