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The Theory Of The Firm Under Perfect Competition
Question
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A perfectly competitive firm is price taker and industry the price maker. Comment.

Answer

Under perfect competition, price of a product is determined by equilibrium between demand and supply of the whole industry. Since every firm has to accept the market price as determined (given) by the industry, therefore, a firm is said to be the price taker and industry the price maker.

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Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

What are selling costs?

Define homogeneous product.

What is meant by differentiated product?

 Define perfect competition.

 Is the seller under perfect competition a price maker or a price taker? 

Define monopoly.  

Define market equilibrium. 

Can a seller under monopolistic competition influence the price?

Why under imperfect competition, MR is less than price?

Why is demand for a good under monopoly less elastic than in monopolistic competition?