What Is a Price Taker?
Price taker, also known as price taker, is a term in economics that refers to the fact that buyers and sellers in a completely competitive market must accept the price determined by the market. Every individual (buyer or seller) in the market, the price they face is given by the market, that is, the equilibrium price adjusted by the market supply and demand. In layman's terms, an individual who uses the market price as his own purchase or sale price. [1]
Price taker
discuss
- Chinese name
- Price taker
- Foreign name
- Price taker
- Also known as
- Priceee
- Equilibrium price
- After adjusting for market supply and demand
- Price taker, also known as price taker, is a term in economics that refers to the fact that buyers and sellers in a completely competitive market must accept the price determined by the market. Every individual (buyer or seller) in the market, the price they face is given by the market, that is, the equilibrium price adjusted by the market supply and demand. In layman's terms, an individual who uses the market price as his own purchase or sale price. [1]
- Elucidate
- The state of "perfect competition" must meet four conditions: there are numerous buyers and sellers in the market, they are passive receivers of market prices, and they cannot influence market prices; each manufacturer's products have no difference and can be completely Replace each other; manufacturers can enter or exit a certain industry freely without any cost; market information is completely unobstructed, and everyone is fully informed.
- To meet these four points, it is considered "perfect competition under ideal conditions." In this state, individual manufacturers have no ability to change the transaction price at all, and they are completely passive. The "price taker" is such a manufacturer. The customers they face can only accept a single price, and no matter how much they buy, this is the only price. If the manufacturer raises the price slightly, the customer will not accept it at all, and all will run away; if the manufacturer lowers the price slightly, the customer will all be attracted, one by one.
- However, we have to point out that this "perfect competition" state has almost never been achieved, which means that such assumptions do not conform to reality. The goods sold by different manufacturers are always somewhat qualitatively different, and the "total cost" paid by each customer and the "all goods" purchased by them are not completely the same [2] .