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Explain What Price-Takers Are There When There Is A Perfectly Competitive Market

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Price takers are individuals or firms who take price they way it is in the market. In perfect competitive market, the average price level of goods and services form the market price. This market price controls and determines both demand and supply. The firms, producers and consumers have no option that to take the price the way market situation kept them to be. In such business where price are adopted the way they appear in market is called price taking. Price taking producers are producers who believe that their product price make no different in market price. Therefore, their individual price has no effect on the market price. Then, the only option is to produce and sell with the market price. Those producers are referred to as price-takers producers. Let us examine these …show more content…

Explain your answers based on the conditions of competition that we learned in this chapter
a) Aspirin
b) Jay-Z concerts
c) Jeeps
Industries that are perfectly competitive are the firms that have free exit and free entry. The prices are determined by the market demand and supply. This situation is critically analyzed in the following cases.
a) Aspirin: Aspirin industry is a perfect competitive industry because many manufacturers produce aspirin. The product has free exit and free entry because it well standardizes in such a way that new manufacturers can easily enter and old ones can easily exit.
b) Jay-Z concerts: Jay-Z concerts are not perfectly competitive industry because there no free entry and free exit into the industry. There is only one industry that produces Jay-Z concerts and the product has no variety of industries that produce variety of it.
c) Jeeps: Jeeps are not produced under a perfectly competitive industry: Jeeps are not produced in a perfectly competitive industry. The manufacturers of Jeeps are few each holding a large market share. Therefore, the products are not standardized in the minds of the

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