Price setter
Definition. A price setter is a firm with market power that can influence the price of its product by varying its output, because it faces a downward sloping demand curve rather than a horizontal one. A monopoly is the clearest example, as it is the sole supplier and can choose either price or quantity but not both independently.
A price setter maximises profit by producing where marginal revenue equals marginal cost and then charging the price the demand curve will bear at that output, in contrast to a price taker.
This term belongs to Monopoly in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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