Price taker
Definition. A price taker is a firm that has no power to influence the market price and must accept the price determined by the wider market, selling all its output at the ruling price. This occurs in perfect competition, where each firm is too small to affect price and faces a perfectly elastic demand curve.
Because the firm can sell any quantity at the given price, its marginal revenue equals the price, and it maximises profit by producing where marginal cost equals that price.
This term belongs to Perfect Competition in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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