Which of the following correctly explains why sellers in a perfectly competitive market are price takers?
A) There are few sellers, and so they have the power to take whatever price they want.
B) There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. Thus they have no choice but to take the price generated by the market process.
C) Sellers in a competitive market have the power to influence price by colluding with one another and using quotas to limit overall market output and thus raise price.
D) Individual buyers in a competitive market have the power to influence price, and thus can impose prices and other conditions on powerless sellers.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many sellers and buyers, and none of them has the power to influence the price. The market process determines the equilibrium price based on the intersection of supply and demand, and each seller must accept this price as it is. Therefore, sellers in a perfectly competitive market are price takers.

Which of the Following Correctly Explains Why Sellers in a Perfectly