The firm in a perfectly competitive, market is a price taker. This designation as a price taker is based on the assumption that:

The firm has some, but not complete, control over its product price.

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There are so many buyers and sellers in the market that any individual firm cannot affect the market.

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Each firm produces a homogeneous product.

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There is easy entry into or exit from the market place.

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Solution

The correct option is A There are so many buyers and sellers in the market that any individual firm cannot affect the market.
In perfectly competitive market firm is the price taker whereas industry is the price maker. It is based on the assumption that there are so many buyers and sellers in the market that any individual firm cannot affect the market.

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Similar questions

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[1 mark]

In which kind of market, a firm is a price taker?

At what level of price do the firms in a perfectly competitive market supply when free entry and exit is allowed in the market? How is the equilibrium quantity determined in such a market?

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