Question

In a perfectly competitive market, all producers sell identical goods or services. Additionally, there are many buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price takers.
True or False?

Answer 1

Answer:

True

Explanation:

In a perfectly competitive market, all producers sell identical goods or services. Additionally, there are many buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price takers. Market price is set by the forces of demand and supply.

If the seller attempts to set his own price and sets it above the market price, the seller would lose all its customers and make zero sales.

If the seller attempts to set his own price and sets it below the market price, the seller would make losses .

I hope my answer helps you.